Successful business owners understand the importance of having a strong vision for the future. 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,” says 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.”
According to a Construction Financial Management Association study, companies that have specific strategic plans with clear targets and goals make 33 percent more profit than companies without targets. More than 80 percent of the 300 small business owners surveyed in the recent 4th Annual Staples National Small Business Survey said they do not keep track of their business goals, and 77 percent have yet to achieve a vision for their company.
What are your business goals? Here are nine real-world guidelines that will help you to set or revise the goals that will guide you along the path to greater profits:
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 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 of near-immediate results.
Long-term goals usually revolve around your “vision” for the company – where do you want it to be five or 10 years from now, or where it should be when it is time to retire. Because of the broader nature of long-term goals, it is best to set them first.
Once long-term goals have been defined, 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 measurable within a short-term window?
2. Make sure your goals are specific. 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 percent or reducing overhead costs by 6 percent 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. A goal without a deadline is little more than an idle thought; in fact, goals without time limits are not goals at all. Increasing revenue by 12 percent satisfies the need for specificity, but without a time limit for the goal to be accomplished, it has little or no meaning. Pledging to increase sales by 9 percent by the first of next year adds a sense of urgency and a no-escape clause that makes it difficult to find a way out of accomplishing the goal.
4. Make sure goals are realistic but challenging. There is an old saying among tennis players: If you want to improve your game, you must play with someone who is better than you are. Doing so provides an ever-present challenge to do better. When it comes to setting business goals, it is important to set them high enough that achievement will not be a walk in the park, but realistic enough that they are achievable.
5. Gather input from employees. You may have a well-defined set of personal objectives for your business, but an important part of achieving those objectives is getting 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 is really important to have enthusiastic buy-in from your employees,” says San Francisco-based business coach Bill Baren. “Everyone feels that they have some ownership in the goal, as opposed to the boss acting as a dictator.”
“Even a really good boss can’t see it all,” adds Francisco Dao, founder and president of California-based The Killer Pitch. “Get the feedback of people who will be working on the front line to meet or beat the company goals.”
6. Goals should be action-oriented. In defining your goals, specify which actions need to be taken, by which people, and when – and do not forget to include yourself. 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. Do not carve goals in stone. While it is important to keep your goals specific and time-oriented, it is equally important to stay flexible. In business, the unexpected is always lurking right around the corner. When it rears its ugly head, it may be necessary to adjust your goals to compensate for a change in circumstances without losing any of the momentum already gained.
8. Put them in writing. Committing your goals to writing is an important first step in achieving them, as 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 percent more likely to achieve our goals just by writing them down.
9. Celebrate every success. Arguably, there is no better way to keep motivation at a high level than celebrating successes as they are achieved. Your short-term and long-term goals will be made up of individual increments, each of which can be, and should be, monitored on a regular basis. By celebrating even minor successes, you put renewed energy into the effort to push on to the greater successes on the horizon.
William J. Lynott is a veteran freelance writer who specializes in business management as well as personal and business finance. For more info, please visit www.blynott.com.
