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Setting Annual Goals

Is setting next year’s goals a priority for you right now? Leaders are responsible for balancing finishing the year strong with increasing the focus on the next year. And it’s crucial to plan for next year. Why. Because in the words of Yogi Berra:

if you don’t know where you are going, you’ll end up someplace else

Goals provide the focus for your business and, more importantly, your team. And they need to be set with several considerations. First, where do we expect to finish this year? Second, based on our leading indicators right now, where will we start next year? And finally, where do we have to finish next year to stay aligned with our three to five-year vision for the business? So, let’s work on setting next year’s goals right now.

Setting Annual Goals – SMART or SMARTER?

You have probably heard you should set goals using the SMART acronym. Goals should be Specific, Measurable, Attainable, Realistic/Relevant, and Timebound. When setting goals, I prefer to use the format created by Michael Hyatt, the SMARTER goal, as outlined in his book Your Best Year Ever. In that framework, goals must be:

  • Specific – identity precisely what you intend to achieve with as much specificity as possible
  • Measurable – goals must be easy to measure, and the data must be readily accessible and reviewed regularly
  • Actionable – every goal should start with an action verb (Achieve, sell, build, grow)
  • Risky – you should set the goal high enough that it makes you a little bit uncomfortable. Don’t make it so aggressive you wake up every night in a cold sweat; make it bold enough that it’s just past your comfort zone.
  • Time-keyed – every goal must have a date tied to it. The target must have a delivery date.
  • Exciting – the goal must give you energy; it must be something you get excited about achieving.
  • Relevant – your goal should be aligned with your vision, values, and strategies.

The SMARTER framework will help you build goals for your business that bring energy and not dread. I prefer it over the SMART framework because three elements are: 1) risk so you push yourself; 2) relevance, so they align with the rest of the business and 3) excitement, so they become something to celebrate once achieved.

Track Your Progress Relentlessly

Another critical item to consider is making your goals Measurable. When I teach business owners how to build a business plan that works, we spend a lot of time setting Objectives or goals. And every discussion starts with the debate on making them graphable. If it’s not graphable, it’s not an objective; it’s an Action Plan. When you view your goals on a graph, they provide a much better context. I teach clients to track four elements on their charts in my work. The first is the Plan number. What goal did you set for the year, and what does that number look like each month? The second is the Prior Year’s number; what better way to see how you’re doing than by comparing it to last year? Then we add in the Actual number. How are we performing? Finally, we add in the Forecast number. 

The last one usually has the most questions. “Why would I forecast?” Let’s say we see a change in market conditions that could move our numbers up or down in the future. Every month, it is an excellent exercise to “future cast” and revise your future numbers based on trends you see. If you see an upward forecast for sales, that may help you think through production capacity or hiring needs. That’s why forecasting is essential. It’s helpful to look into the future so you don’t slam into an unexpected situation.

Ensure Your Goals are Relevant

The final piece is making goals relevant. And there are two ways I liked to do that. The first is to review your progress against goals every month with your leadership team and business coach. It keeps them relevant and forces you to take a regular, hard look at the numbers. The second is to integrate the goals across your business in line with your vision and your three-year plan. They should also align with and inform your strategies, which will grow your business. Don’t put in a goal based on aggressive direct mail if direct mail isn’t one of your strategies. And finally, where there are gaps in achieving your goals, create an Action Plan or project that will fill the void. That will help you prioritize your Action Plans.

Setting Goals or Objectives is a crucial part of building your business. They do not stand in isolation, though. When creating them, follow the SMARTER framework. And finally, track them regularly. There is nothing more important than being intentional about reviewing your numbers. It’s one of the biggest lessons I took away from my time with vast Fortune 500 companies.

The annual goal-setting process is a corporate tradition for many organizations. But this tradition can bog a company down and keep them from achieving its goals. You can lead your team to develop goals that matter by creating SMARTER Goals, tracking your progress, and ensuring goals are relevant. When you succeed, the annual goal process becomes a rallying cry for your organization.

Are you stuck on creating your goals for 2024? An intensive coaching session can help! Set up a call today to learn more!