Business Goals are the broad primary outcomes towards which effort and actions are directed in a business. They are whats, not hows and a business might have multiple goals to achieve. For example, "we must be a leader player and increase our share in the home loan market". Normally there is no measurement in the definition of a goal and only gives you the general direction of the company.
A vague statement like, “Our Company is going to be the largest soft drinks company in the world” is a goal. It does not have any parameters or time restrictions. Yet, it is something you company intends on achieving. How you are going to meet the goals is not clear but you know that is where your company will be heading. Unless you set goals your employees have no motivation to strive better. In this highly competitive world just jogging along a set path is not sufficient. To get an edge over your rivals you have to plan on being better than them. Here setting goals for your organization will inspire your team to get more involved in the company’s success. Goals are a subset of your company’s vision. They are creative thoughts and dreams, that when turned into objectives become a reality.
Business Goals Examples
The illustration below provides a checklist of Common Business Goals
The Importance of Business Goals
Businesses should not fear setting goals because there is absolutely no downside to the process. Goals give a business direction and help measure results. There are four detailed and important reasons why a business should have goals.
- 1. Measure success - Good organizations should always be trying to improve, grow, and become more efficient. Setting goals provides the clearest way to measure the success of the company.
- 2. Leadership cohesion - Setting goals ensures that everyone understands what the organization is trying to achieve. When the leadership team clearly understands what the business is trying to accomplish, it provides greater rationale for the decisions management might make regarding hiring, acquisitions, incentives, sales programs, etc.
- 3. Knowledge is power - If an employee knows and understands the goals, it becomes easier for him or her to make daily decisions based on the long- and short-term goals that were established.
- 4. Reassess goals - When goals are set, they can be monitored on a regular basis to verify the business is headed in the right direction. If the business is not achieving or moving towards accomplishing its goals, then changes or adjustments need to be made.
Elements of a Business Goal
Every successful business has clearly set and articulated goals to attain specific objectives. Yet, in the world of small business, many businesses lack a focused goal. Whether you have a 50-employee company or an empire of one, your business success depends on your ability to set and achieve goals. Put your business on the fast-track by applying the principles of SMART goal setting. SMART is an acronym for the 5 elements of specific, measurable, achievable, relevant, and time-based goals. It’s a simple tool used by businesses to go beyond the realm of fuzzy goal-setting into an actionable plan for results.
- Specific: Great goals are well-defined and focused. “Obtain two new billion dollar corporate clients in the Boston property insurance market” is more meaningful to mobilize your team than “Get more business.” Ryan Blair, The Goals Guy eloquently states,"Focus creates a powerful force: goal power. The moment you focus on a goal, your goal becomes a magnet, pulling you and your resources toward it. The more focused your energies, the more power you generate."
- Measurable: A goal without a measurable outcome is like a sports competition without a scoreboard or scorekeeper. Numbers are an essential part of business. Put concrete numbers in your goals to know if you’re on track. A goal white board posted in your office can help as a daily reminder to keep yourself and your employee focused on the targeted results you want to attain.
- Attainable: Far too often, small businesses can set goals beyond reach. No one has ever built a billion dollar business overnight. Venture capitalists and angel investors discard countless business plans of companies with outlandish goals. Dream big and aim for the stars but keep one foot firmly based in reality. Check with your industry association to get a handle on realistic growth in your industry to set SMART goals.
- Relevant: Achievable business goals are based on the current conditions and realities of the business climate. You may desire to have your best year in business or increase revenue by 50%, but if a recession is looming and three new competitors opened in your market, then your goals aren’t relevant to the realities of the market.
- Time-Based: Business goals and objectives just don’t get done when there's no time frame tied to the goal-setting process. Whether your business goal is to increase revenue by 20% or find 5 new clients, choose a time-frame to accomplish your goal. Once your business goals are SMART, break down each goal into a specific set of tasks and activities to accomplish your goals. It’s important to periodically review your goals and make adjustments if necessary. Goal setting for your small business is an essential tool for success.
Categories of Business Goals
One more way to think about business goals is to consider each of the four categories into which most goals fall:
- Day-to-day work goals are directed at increasing your company’s everyday effectiveness. They may involve things like order tracking, office management, or customer follow-up. As a start, name at least one change that you can make in your day-to-day operations that will make a difference in your overall effectiveness. Write it down in the form of a business goal.
- Problem-solving goals address specific challenges that confront your business, such as low employee morale or quality of service issues. List the two biggest problems that face your company, and then write goals that can solve them.
- Development goals encourage the acquisition of new skills and expertise, whether for your employees or for yourself, and whether you run a large company or operate as a freelancer or an independent contractor. So, how about formulating at least one development goal for yourself or your company?
- Innovation goals help you find new ways to improve the following: the products or services that your company offers, how you market your company, and how you distribute and deliver what your company sells. Can you identify any innovative approaches that could make your business more effective in the future? If so, formulate an appropriate goal.
- Profitability goals set your sights on where you want your bottom line to be. When all is said and done, profit is the No. 1 goal for profit-making companies. For nonprofit companies, this goal may take the form of how many dollars in contributions you plan to raise or a goal for increasing the company’s endowment.
Business Goals: Steps the Follow
Setting business goals within an organization is common practice, shared globally by all businesses. Executives set business goals that help increase motivation and determination, as well as those that offer critical learning strategies for training purposes. Whether you are just starting to evaluate your goals or if you are in the re-evaluation process, follow these six steps for successful goal setting:
- Define Quantifiable Goals: The first step in setting business goals is determining exactly what you want to accomplish. Make sure your goal is worth your effort. Think about how you would design goals if you were certain that they would be successful. Conversely, what would your strategy be if this was your last opportunity? It’s important to set clear goals; you should know exactly where you want to go and you should not waiver from your target regardless of failures along the way. Be as specific as possible, so you are able to determine when you’ve reached your goal.
- Make your Goals Specific: Once again, make sure your business goals aren’t too vague. It’s critical to use a goal setting formula that gives your goal a built-in action plan. Define your end goal and create a road map for exactly how you’re going to reach your goal. Be specific with what you want to accomplish at each check point. You'll achieve a great deal more than you would without these guidelines.
- Commit to your Goals: Make a commitment and stick with it. Once you’ve set your plan in motion, stay motivated to see your goals through to the end. Don’t procrastinate or second-guess your decisions, as this will only delay the process. Don’t forget to enjoy the process and reward yourself for staying focused.
- Make your Goals Public: An extremely effective technique for achieving business goals is making them public. Invite a team or even a single person into your plan; you’ll face accountability which can be very motivating. Once you share your goals with someone, you can determine what sort of involvement they will have with your plan. Will you ask them to check in with you every so often or not? What their role entails is up to you.
- Set a Deadline: If you don’t set a deadline, your goal will fail. Goals without deadlines indicate that you are not fully committed. Determining a deadline puts your goal into context. Pick a reasonable date that isn’t too aggressive, but also not too far away.
- Reward Yourself: In the goal-setting process, there’s one very important thing to remember: you. Once you’ve accomplished a goal or reached a milestone within your goal, make sure to mark the occasion. You’ve invested an incredible amount of time, energy and determination to reach your goal, so make sure you take a moment to celebrate your success.
Setting Business Goals - Long Term and Short Term
Start by distinguishing your long-term goals from your short-term ones.
- Your long-term goals should have a timeline of about three to five years, says Maria Marshall, an associate professor at Purdue University in West Lafayette, Indiana, who has conducted research on small and family-owned businesses. They should articulate your company's mission statement, reflecting the reason your company was founded. "When you think about why the company is there in the first place, goals take on a whole different meaning," says Bill Baren, a business coach and founder and president of Bill Baren Coaching, based in San Francisco. "There's more energy behind them. They don't feel forced." Marshall says that these types of visionary goals usually fall within four general areas: service, social, profit, or growth:
- Service - Goals related to improving customer service satisfaction or customer retention.
- Social - Goals that focus on giving back to the community, through philanthropy or volunteer organizations, for example.
- Profit - Goals set to increase profits by a certain percentage.
- Growth - Goals related to the expansion of the company, through new employees, for instance.
- The short-term objectives should ideally have a much narrower timeline. Increasing sales 24 percent a year is a pretty big number, but increasing sales two percent each month seems totally doable. Break down specific actions to be taken by specific people, assigning someone in each department involved to be accountable—and to help motivate employees. Perhaps the most important component of these short-term goals is tying them into the long-term ones. Because you've already identified those long-term goals, it's easier to see how focusing on seemingly small details can be a step toward achieving a broader long-term aim. Baren suggests that inspiration and accountability are also two essential components for turning goals from abstract into reality. "Accountability without inspiration is like a prison sentence," he says. "Goals are not separate from the culture of the organization," he continues. "It's not an accident that Zappos.com has done over $2 billion in business. They've created a culture of caring—when they ask their employees to do something, they go and do it."
Pitfalls of Developing Business Goals
Setting business goals can go wrong if not done correctly. Seasoned business managers put a great deal of time and energy into developing and implementing business goals. There are two big pitfalls a business manager should try to avoid.
- 1. Setting unrealistically high goals - When a goal is perceived to be unreachable, no effort will be made by the employees to achieve them. A businessperson needs to set realistic goals so that the employees can come together as a team to achieve them.
- 2. Setting vague and ambiguous goals - Goals that are not specific enough do not lead to action and are useless. If achievements cannot be measured against the businesses expectations, then a manager cannot observe any progress towards the goal.
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