In all my years working with Fortune 500 companies, the annual goal process was a constant source of frustration. Goals are created at the beginning of the fourth quarter and set for the entire next year. And those goals are typically constructed out of context with other planning aspects for the business. For small business owners, it’s a different problem. In speaking with them, what I hear so often is that they don’t create goals. Instead, they work hard and hope the revenue will come through. There is a better way to build business goals that matter, beginning with how and when they’re set and ending with the way you track them.
Build Business Goals the Right Way
You have probably heard you should set goals using the SMART acronym. Goals should be Specific, Measureable, Attainable, Realistic/Relevant, and Timebound. When I’m 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, the data must be readily accessible and reviewed regularly
- Actionable – every goal should start with an action verb (Achieve, sell, build, grow)
- Risky – the goal should be set just high enough that it makes you a little 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 the idea of 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 due to three elements are: 1) risk so you push your self; 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 Against Goals Regularly
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 for the business. 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. In my work, I teach clients to track four elements on their charts. 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 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. It is a great exercise every month 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 to think through production capacity or hiring needs. Tha’s why forecasting is essential. It’s a helpful way to look into the future, so you don’t slam into an unexpected situation.
Build Business Goals that 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 your business coach. It keeps them relevant, and it 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 be in line with and inform your Strategies, which are how you 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 to achieve your goals, create an Action Plan or project that will fill the gap. 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 you are setting them, follow the SMARTER framework and focus, especially on relevance, excitement, and excitement for your business. 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.
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