By William Lynott
Successful business owners understand the importance of having a strong vision for the future—and an important part of that vision is a clear idea of what success looks like and laying out a route to get there. The ultimate goal, of course, is profit; and setting clear and specific goals is the surest road to that destination.
"Companies without precise overhead and profit goals never make enough money and probably won't make a profit," said George Hedley, best-selling author of Get Your Business to Work. "Companies that carefully track costs, target profit, and control overhead are in control and stay ahead of their competition."
Here are seven real-world guidelines for goal-setting:
1. Create both long-term and short-term goals.
While there will usually be an interactive relationship between long-term and short-term goals, each deserves to be defined separately. Long-term goals will usually revolve around a "vision" for the company: Where you want it to be five years or 10 years from now, or where you want it to be when it's time to retire. Because of the broader nature of long-term goals, it's best to set them first.
Once long-term goals have been defined, it's time to look at the short term, one year or less. What needs to be done now? What are the areas that can be addressed with the expectation that results will be measureable within a short-term window?
Long-term goals provide excellent motivation to keep focused on the elements that will help shape the company's vision for the future. Short-term goals focus on steps that can be taken today with the expectation that results will be evident within a year or less.
2. Create specific goals.
Perhaps the deadliest form of self-delusion for business owners is the failure to set any business goals. Next in line is using generalities instead of specifics. "Improving profits" or "increasing sales" are pitfalls masquerading as goals. In order to have meaning and to be effective, goals must be expressed in specific, measurable terms. "Improving gross profit by 4%" or "reducing overhead costs by 6%" are specific, meaningful goals. Equally important, they are measureable. There's an old business saying: If you can't measure it, you can't manage it.
3. Set a time limit for the goals.
Increasing revenue by 12% satisfies the need for specificity, but without a time limit for the goal to be accomplished, it has little or no meaning.
We will increase sales by 9% by Jan. 1, 2018 adds a sense of urgency and a no-escape clause that makes it difficult to wheedle your way out of your pledge.
A goal without a deadline is little more than an idle thought. Goals without time limits are no goals at all.
4. Make sure goals are both realistic and challenging.
There's a saying among tennis players: If you want to improve your game, you must play with someone who than you. Playing with someone who is better than you are provides an ever-present challenge to do better. Playing with someone who is less skilled makes it unnecessary to improve your game.
When it comes to setting business goals, it's important to set them high enough that achievement isn't going to be a walk-in-the-park, but realistic enough that they are achievable. In short, set goals that will require hard work and perseverance, but are doable.
5. Gather input from employees.
You may have a well-defined set of your own objectives for your business, but an important part of achieving those objectives is getting your employees in on the act. Top-down directives from the boss are far less effective than enthusiastic support from the people who play a major role in day-to-day operations, and one of the most powerful ways to get support from your employees is granting them a little "pride of authorship." It's no secret that employees who feel that they played a role in setting goals are likely to work hard to meet those goals.
6. Make the goals action oriented.
In defining your goals, specify which actions need to be taken, by which people, and when (and don't forget to include yourself).
If your goals include revenue objectives, obviously, your sales team will play a major role. What needs to be done as a team? What needs to be done by individuals?
Reducing overhead expenses is a good example of a goal that will benefit by cooperation and enthusiasm from all employees, some more than others.
Which employees are most likely to have opportunities to help reduce overhead, and have you asked them for their input?
7. Put goals in writing.
Committing your goals to writing is an important first step in achieving them. Mental goals are too easy to ignore. With all of the pressures imposing on our daily lives, the best of intentions left out there floating in the ether are likely to give way to "more pressing" matters. Committing goals to writing creates an urgency that keeps them in focus.
In a study involving 267 participants, Dr. Gail Matthews, a professor of psychology at Dominican University, River Forest, Ill., found that we are 42% more likely to achieve our goals just by writing them down.
More than 80% of the 300 small business owners surveyed in the recent 4th Annual Staples National Small Business Survey said that they don't keep track of their business goals, and 77% have yet to achieve a vision for their company.
Instead of setting your business up for mediocre performance, or even failure, help to set your business up for success by applying these seven goal-setting tips.
Lynott is a veteran freelance writer who specializes in business management and personal and business finance. Reach him at firstname.lastname@example.org or blynott.com.