Setting goals is a step that all small business owners knows to be necessary, but actually going about it can be quite difficult. Some people make the mistake of creating a strategy before setting a goal, which is like planning a trip without knowing the destination.
Before setting goals for your business, it's important to distinguish goals from strategy, and strategy from tactics, and how each one supports the other.
Goals should create a target that is specific, measurable and attainable for your company. As long as it meets this criteria, the goal will be useful. For example, you might set a goal to increase all sales or market share by 20 percent over the next year or focus on increasing profits instead, which could involve lowering expenses and increasing sales. You could also narrow the focus on growing specific high-margin product segments, or set a goal on improving business operations. Regardless of the type of goal you set, make sure it meets S.M.A.R.T. criteria:
Specific - Your objectives cannot be vague. A goal should always be easily communicated and understood, and everyone involved should know when the goal has been reached.
Measureable - Make sure the goal is quantifiable. If it cannot be measured, you cannot know the goal has been reached or how it really impacts the business.
Action-oriented - Identify the strategies and tactics that will help you reach your goal.
Realistic - Goals should always be challenging, but also attainable. If you cannot realistically reach the goal with the resources you have, it will only waste time and discourage people.
Timeline - Every goal should have a timeframe. This not only adds urgency and purpose to the goal, but it also prevents you from letting the process drag on forever, especially if the goal ends up being unsuitable for your company.
Strategies are initiatives that help your company reach your goals. If your goal is to increase profitability, there are a number of strategies you can pursue:
Adding new products - You can introduce new products and services that will supplement your revenue stream.
Solving new problems with existing products - You can find new customer needs your products can fulfill, possibly allowing you to tap into new markets.
Getting existing customers to buy more - Similar to solving new problems, this strategy relies on increased sales from existing customers. You can promote sales frequency with price promotions and discount offers, or by simply understanding what your customers value most and offering more of it.
It often makes sense to use more than one strategy to support a goal, but make sure that you can manage each strategy to a successful conclusion.
After establishing the strategies that will support your goals, you must decide on tactics that will lead your strategies to success. Examples might include optimizing your landing page design and copy to increase conversions, or improving your online shopping cart to prevent customers from abandoning them. You might also experiment with discounts or rewards-club offers that promote increased sales or customer loyalty, or offer flexible payment and financing options. All of your tactics should do the heavy lifting for your strategies, driving them to a successful conclusion that helps you meet your overall business goal.
Unless you are a sole proprietor, it's important to get buy-in from your partners and employees about the goals you want to set for the company. You may have a vision in mind, but it will be hard to reach unless everyone is motivated to make it a reality. When employees play a role in setting goals, they are more likely to feel committed to reaching them.
Having multiple goals can fracture everyone's focus on the big picture and dilute your efforts to grow. Sometimes goals can overlap with each other and lose clarity in the minds of employees. You should also be aware of how company systems, tools and culture can sometime work against your stated goals. For instance, a goal that seeks to improve customer satisfaction ratings will be difficult if your staffing levels force customers to wait on hold for long periods of time.
It's hard to dispute that the most successful companies in the world are goal oriented. Companies that know how to establish the right benchmarks and meet them are more successful than the rest. If you collaborate with employees to set measurable, attainable goals and chart a course to get there using proven strategies and tactics, you will be well on your way to success.