If you’re considering setting small business goals, you may be wondering how, and which strategies may help you pick effective goals to keep moving your business forward.
What Are Business Goals?
Business goals are objectives important to helping a business achieve short-term and long-term success. Without business goals, a business owner or manager may flounder and struggle to earn a profit. With clear and reasonable goals, you may find yourself in a better position to keep the business open and operating for years to come. One of the most popular methods of setting business goals is the SMART goals framework. SMART is an acronym for criteria to use when choosing goals:
Specific: “Specific” means a goal with a clear finish line that’s easy to measure. Something such as “increase profits” is not specific, whereas “increase profits by 20%” or “increase revenue by $10,000 per month” qualifies as specific.Measurable: This helps you know when you’ve crossed the finish line and keeps you pointed in the right direction. You can’t measure a vague goal like “increase customer loyalty,” but you can measure the number of repeat visits, average revenue per customer, or results from a customer survey.Achievable: You may have a dream of earning a billion dollars a year from your business. That may be possible at some point in the future. However, is it achievable in the next 12 or 24 months? When setting goals, make them realistic and reasonable, but not too easy.Relevant: Goals should be focused on business results and relevant to what you’re trying to achieve. For example, it may be fun to grow your social media following. But your Instagram or Twitter accounts might be irrelevant if you don’t turn followers into customers. What’s relevant depends on the business and your goals. Ultimately, every goal should lead to improving long-term profits.Time-bound: If you don’t have a strict deadline, you may find yourself continually delaying or kicking the can down the road. With time-bound goals, you have a little pressure on yourself to keep working toward that deadline.
Of course, these are only guidelines and one method to set goals. However, SMART goals are popular for a reason. They work well for many applications, including business management. Working with an action plan or business plan can also help you build a blueprint to grow and maintain a profitable company.
Short-Term Business Goals
In business, short-term goals often mean one year or less. For example, in accounting and finance, one year is used as a benchmark for categorizing assets and liabilities on the balance sheet and determining certain tax rates. Here are some examples of short-term business goals to inspire your goal creation:
Increase average sales per day by 50 in the next 90 daysGrow revenue by $20,000 per month after one yearLower employee attrition rate by 10% over six monthsMake five sales to repeat customers per weekDecrease cost of production by 5% per unit in six monthsLower average days to invoice collection by seven days after one year
Again, every business is unique, so these goals could be spot-on for your business or completely different from what’s important to you. Understanding your biggest challenges, opportunities, and key performance indicators (KPIs) is critical. You can focus your goals and efforts on your business’s most relevant and effective needs.
Long-Term Business Goals
Long-term business goals should have you thinking more like five to 10 years instead of immediately beyond the one-year horizon. Even if you were not good at telling your high-school guidance counselor or old boss where you saw yourself in five or 10 years, here’s where it’s time to apply that concept to your business. Long-term goals may also follow the SMART goals framework, but can be loftier and require more to achieve. You may use short-term goals as stepping stones to reach these larger goals. Examples of small business goals for long-term results may include:
Double the number of brick-and-mortar locations in five yearsAdd 25 sales representatives over the next two yearsReach 100,000 customers in 10 yearsHit $250,000 in annual revenue by 2025Reach net-zero carbon in 10 yearsProduce products using only recycled materials by 2027
Goals are a helpful management tool in many ways. Setting long-term goals can motivate you and your team to work together toward success.
Examples of How Small Businesses Set Goals
To better understand setting small business goals, here’s an example. Let’s say you bought a new food truck and want to turn it into a successful business to support your family. Here are several goals that such businesses might consider to get rolling in the right financial direction:
Find two weekly recurring events and four monthly recurring events to attend within three monthsAverage $500 in sales per hour of operations by the end of year oneCreate a website and forms for online catering requests within 30 daysHire two part-time employees within the next two weeks and four part-time employees by the end of the first yearAdjust the menu to achieve a minimum 7% profit margin within six monthsReach $100,000 in annual sales by the end of year twoEarn $60,000 in annual profits by the end of year three
This blueprint offers a mix of short- and long-term goals, which is great for building and maintaining momentum. If goals are too hard or all long term, it may be difficult, if impossible, to hit your target. With the right goals and consistent tracking, you’re setting yourself up for the best possible results.
The Bottom Line
Business goals are critical for many business owners to succeed. Knowing where you want to take your business helps you and your team stay focused on the right places and activities. With a laser focus on goals following the SMART goals system, there’s no reason you can’t find the success you’re seeking. Combining strategic goals, hard work, and a little luck, you may find yourself on track to run your dream business for years to come.
