Writing out a business plan is a vital step in starting a new company. It helps you create a roadmap of the future of your company and it's the first place investors look to see if you're for real. However, if your company goals aren't laid out clearly or they're unrealistic, investors won't get on board with your vision.
To guide your company toward success, you need to know what success entails. You'll have a much greater chance of making it if you have a direction to move toward. Goal setting gives your company a target to shoot for in the future.
Big goals don't happen all at once, however. You have to take them step by step and you need to know the objectives you'll have to complete on the way. In this article, we'll show you how to create manageable goals for your business and design a series of actionable objectives leading up to them.
What Are Goals and Objectives for Your Business?
Goals are the big targets in your business planning, while objectives are the actions or landmarks that make up the end goal. Clear goals serve to inspire and rally your team to perform but they're not immediately actionable, specific, or measurable. For example, let's say your business sells computers and your goal this year is to increase your gross revenue. How much gross revenue do you want to bring in? You need an objective amount to aim for.
Let's say you decide to shoot for $300,000 in gross revenue. That means your monthly objective is to make $25,000 in gross revenue ($300,000/12). Your direct cost to make each computer is $500 and you sell each computer for $1,500. That means you need to sell 25 computers a month.
Now, you have a measurable monthly objective, but it's not actionable. You need to give your team specific objectives that will lead them toward achieving the goal. How will they sell an average of 25 computers every month?
Here's a list of some actionable objectives your marketing team could complete to help you reach your sales goal. You should assign objectives directly to an individual or department within your business. Of course, if you're the only member of your business, you'll be doing everything yourself.
- Create two blog posts every week using search engine optimization (SEO) to increase brand awareness.
- Create one product video every month and feature it on social media sites like Facebook, Instagram, and Twitter.
- Create an email list for consumers who fill out a form on your website. Send out a weekly email with exclusive news and promotions about the product.
- Use key performance indicators (KPIs) for the company website to identify the top exit page (where the most visitors leave). Redesign the page.
Decide on Goals for Your Business
How do you decide what your goals should be for your company? Each business's goals will be unique depending on its particular business model. A great place to start the decision-making process is your mission statement. Let's use the same computer company in the following example.
Your mission statement is "to create affordable, easy-to-use computers and offer knowledgeable, friendly, and fast technical support and customer service." There are several keywords in the statement that you can use to develop goals. If you use "fast technical support," your goal might be to increase the speed at which your team responds to customer inquiries.
You can also use other methods to decide your company goals. You might hold a brainstorming session with your team to create your goals or you can set goals about how you'll outperform or reach a different market segment than your competitors.
Here are a few types of goals you might create for your business.
- Operational goals: To be more efficient in your work processes and business strategy
- Profit goals: To increase revenue, reduce costs, or increase market share
- Staff development goals: To train your team, increase their knowledge, or improve their customer satisfaction scores
- Goals for handling problems: To be proactive in dealing with possible market, manufacturer, staff, or product issues and things like natural disasters
- Product goals: To create and release a new product or improve a current one
Evaluate Your Business Goals and Objectives
One of the quickest ways to turn investors off is to include outlandish goals in your business plan. Before they put money into your company, they'll want to know that your goal-setting process is sensible. Both your short-term goals and long-term goals need to be realistic and attainable.
You may believe that your company is capable of achieving incredible results, but investors are practical. For example, no one will believe that your computer shop that currently makes $100,000 in gross revenue will be more profitable than Microsoft in five years.
To prove that your goals are realistic, you'll have to show your work. Create a believable forecast of your future business revenue by analyzing things like your business costs, profit margins, market share, and expected growth.
Using SMART to Analyze Your Business Goals
One way to evaluate your business goals for effectiveness is to use SMART goals. Each letter of the acronym represents a quality that your business goals should have. Here's a breakdown you can follow to make sure you have smart goals:
- Specific: Your objectives should be clear, specific actions. It should also be clear who's responsible for them. For example, your marketing team needs to create an email list.
- Measurable: You should be able to easily gauge your success. For example, you need to sell 25 computers a month to reach your goal. If you sell 23, you may need to adjust your method.
- Attainable: Goals need to be realistic. If you currently sell 15 computers a month, it's very unlikely that you'll immediately start selling 1,000 a month.
- Relevant: Your goals need to be in line with your higher-level goals. Creating a blog and optimizing it to appear high on a search engine results page (SERP) will increase brand awareness and provide a bigger audience of possible new customers.
- Time-bound: Create deadlines for your goals or they'll never get done. For example, your sales team must redesign the landing page for your Facebook Ads by Friday, Nov. 3.
Using OKRs to Measure Business Objectives
Another system you can use for managing goals and objectives is the objective and key results (OKR) method. In the OKR system, the O (objective) is representative of a larger goal, while the KR (key results) represent the smaller objectives you use to measure your progress. Here's an OKR model for your computer sales goal.
- O: Increase profitability for the computer company.
- KR1: Make $300,000 in gross profit for the year.
- KR2: Sell 25 computers every month.
Skynova Can Help You Manage All Your Accounting Goals
Generally, investors are more interested in where your company is going than where it currently is. If they're going to put money into it, they need to see that you have the initiative to grow your business and give them a big return on their investment. Use your business plan to give them a clear understanding of your goals and objectives and you'll have a greater chance of getting their backing.
No matter what type of business you run, you likely want to spend your time growing it, not doing administration. Skynova's software products can help you manage your accounting tasks quickly and easily. Take a look at how simple our business templates and accounting software can make your business processes.
Notice to the Reader
The content within this article is designed to provide a basic explanation of goal- and objective-setting for a small business. It isn't tailored to any specific type of business and may not fit your particular company. Before making any big business decisions that could affect your bottom line or presenting your company objectives to investors, you should seek the advice of a certified professional.