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Set Goals for Your Business

August 14, 2018
Management

The New Year is around the corner, and you are in no doubt looking for ways to ensure that next year is another great year for your business. To do this, you must set goals for your business, but it isn’t just about one goal, every aspect of your business should have a milestone to reach for it to achieve.

What are Goals?

Goals are the markers you use to ensure your business is heading in the right direction. Without them, there is no chance for your business to improve and those that can’t grow are doomed to failure.

When setting goals, you should look at both long and short-term plans for your whole business, sub-areas of your business (costs, marketing, customer satisfaction, etc.) and your employees. Each area might have a different set of goals, but they should all contribute to one singular goal.

Even though goals are often considered necessary, they are deployed rather haphazardly in many businesses. Some management teams will set goals such as:

•       Increase profits.

•       Add more customers to the books.

•       Cut costs.

While there is a clear aim in each of the above, they aren’t really goals. In a business setting, they are counted as a statement as there is no definition as to what counts as a success. For instance, is increasing profits by a dollar a success?

Goal Setting is Important

Another aspect of management and goal setting is the failure to set goals at all. Some businesses feel they are safe in their operations and don’t need to consider ways to improve the business, normally because they have become complacent or don’t understand their market.

Goal setting is a vital business operation which provides significant benefits to the organization, including:

Measuring Success – without a goal, you cannot assess whether your business is being successful. Goals give measurable KPIs to compare and analyses.

Team Cohesion – teams who are working towards a unified purpose are more productive and provide a better and more consistent customer service. You should also avoid goals that are too easy.

Greater Depth of Knowledge of Your Business – When you set goals, you will have ideas on how you can go about achieving them. This will mean developing a deeper understanding of the tactical and strategic operations of your business. The more you study your business’ operations and measure the impact it has, the greater you’ll be able to predict the results of future actions.

Reassess Business Direction – Goals are also a great way for you to assess the direction of your business. If you find it is difficult to achieve certain actions, this could be because you have not considered outside influences on your business. Goal setting gives you specific points to analyze and reassess.

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Setting SMART Goals

This process isn’t just about setting any goal you can think of. Every milestone you are looking to achieve must be clearly designed. A goal should not be too easy, neither should it be too challenging. Use the acronym SMART (Specific, Measurable, Attainable, Relevant and Time Specific) to help.

'Specific' refers to you being able to pass the goal to someone outside of your business and them being able to identify clearly what you want to achieve. Examples of poor specific goals would be: wanting to improve profits, cut costs, or increase productivity. While these tell you what operations need improvement, they don’t inform you of the finer details.

At the same time, you need to ensure the goal is measurable. You might set a goal of increasing foot traffic in your store by 22%. The idea is that the more people who visit your store, the more people who make a purchase. So, you will need to work out a way to determine how many people are entering your store. You can’t start any initiatives until then as you can’t measure success without baseline data or a way to measure change.

'Attainable' refers to choosing goals you know can be achieved. This is difficult because many managers will either set unrealistic goals or those that are too easy. Both can result in poor performances from your staff. Instead, you need something in between the two.

Relevant is also another important but often forgotten aspect of setting goals. You need to ensure the goal is relevant. For smaller goals, they should be related to the larger goal of the whole business. For larger goals, it needs to be something relevant to the business’ ethos.

Finally, you should always give a timeframe to achieve goals in. When you don’t give a deadline, people don’t have any pressure to complete their work, and while this may seem like a good idea, it can mean efforts by staff are less effective, and the quality of work can be damaged as well.

Examples of Good Goals

If you are stuck at setting your goals it can be useful to have a series of examples to help you create your own. So here are some examples of goals that you can adjust for your own business.

1.     Increase profits by 5% by the end of the second quarter.

2.     Increase website conversions by 20% by the end of June.

3.     Decrease material costs by 10% within three months.

4.     Increase staff retention by 50% by the end of 2018.

5.     Design and release a new product in time for summer sales season.

Conclusion

Goal setting is an important operation within your business. Without it, your business has no direction, and its staff cannot rally behind a common cause. Goals need to be set carefully, so they match the SMART criteria and can be used as a force to improve staff productivity and morale.

You should set one major goal for the whole business and lots of smaller goals for your business’ subsections and individual staff members.

Christopher Ragain, CPA

Christopher Ragain, CPA is the founder of Halon Tax and one of the industries top authorities on micro-business taxation and tax planning.

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