How to Set Goals for Small Business
Before starting a new business, it is essential to know how to set goals. The role of goal setting in business’s success is crucial, as goals point to the clear direction.
If the direction in which business should move is clear, then reaching the desired destination will be easier. Moreover, goals allow business owner to determine whether the business achieving the required results or not. Setting a right goal for the business is not an easiest task and requires some theoretical knowledge and practice.
In this article we will look through the mandatory steps to set goals for small business.
Analysis of the Market
Before setting goals for a business, you must have a clear picture of the market. You may have some ideas in mind on how to develop the business. However, in order to see the situation within the industry, you must conduct the market research.
Based on research findings, you may identify for ourselves the needs of your potential customers, and also current trends in the industry. Obtained information will allow you to set appropriate goals that will ensure the success of your business.
There are several method and techniques to analyze market and determine trends. Some of the most popular and widely used ones are SWOT and PESTLE. Both methods have several benefits.
First, with the help of SWOT and PESTLE, you will be able to explore the opportunities that help to strengthen your business model. Second, both methods are cost-effective, which means you do not need to spend a huge amount of money to analyze the market.
Third, after conducting a research using both methods, you will have a better understanding of your businesses’ ins and outs.
Wish vs Goal
Once we have analyzed the market, now it is time to set goals based on research findings. However, not everyone knows how to set appropriate goals.
Many people say “I wish” or “I want” to achieve something. However, they have no clue how they are going to achieve what they desire.
Hence, it is important to distinguish the difference between wishes and goals. Every one of us have dreams and wishes that we want to accomplish. But, not all of us can set goals.
Wishes are our dreams that we want to accomplish some time in the future. We do not have an idea when it should happen or how it should be achieved. For example, one may say “In the future, I want to have a successful business”. This is more of a dream rather than a goal.
Goals, on the other hand, have clear time frame. They give us vision and feeling of successful accomplishment of our dreams. For instance, “By the age of 30, I will have successful business that generates $1,000,000 of annual income”.
On the next part of our article, we will look through the steps that are necessary for setting goals for a small business.
Set Goals for Small Business: SMART Goals
SMART stands for Specific, Measurable, Achievable, Relevant and Time-Based.
Goals must be specific, which means they need to be well defined and easily understandable.
After a certain period of time, we must be able to measure whether the goal was achieved or not. We should not just say “Attract new customers”. Instead, the goal should sound like “Attract 100 new customers”. That way, we will able to say whether we succeeded or not.
We must be able to achieve the goals that we set. If we take a look at the example above, we may be able to appeal 100 new customers. However, if we set our goal to engage a billion of new customers, it may be overwhelmingly hard. As a result, we might lose motivation and focus. (Please note, this is just an example. Your business might be able to attract far superior number of customers).
On the other hand, our goals must not be too easy to achieve. They should present us with an opportunity to challenge ourselves.
The goals that we set must be relevant which means we should possess the knowledge, time and resources to accomplish them.
Finally, the goals must be time-based. In other words, they must have deadlines. For example, we may say “Business must attract 100 customers by the end of the month”.
Plan on How to Achieve Goals
We have identified how to set goals. Let us say that we came up with a goal for our business. Now it is time to make a detailed plan to accomplish the goal that we have set.
In this step, we have to divide our goal into long-term and short-term goals.
Long term goals should indicate the achievements we want to accomplish within 3, 5 and 10 years.
Short term goals on the other hand, should set milestones in shorter time span. We can specify weekly, monthly or quarterly goals.
By dividing our goal into several milestones, we will be able to analyze the effectiveness of our workflow. Moreover, short term goals give us instructions towards our direction.
For example, if our annual goal is to generate $600,000 of revenue. We can divide the annual revenue by 12 to get the amount of money we need to earn per month. Hence, our short term goal will be to generate $50,000 of monthly revenue.
Goals Need to Be Written Down
We set the goal indicating our direction to develop our business. We divided the goal into several time periods. All the progress that we have so far must be written down.
When we write down our goal on a piece of paper, the perception of accomplishing the goal becomes real. We will perceive our goal as something that can be reached, not something that can only be dreamed about.
We should use future tense with positive outcome while writing down our goals. For instance, instead of writing “I would like to increase sales by 50% by the end of the year”, we should write “I will increase sales by 50% by the end of the year”. The latter gives us feeling of accomplishment, thus motivates us.
After Goals Have Been Set
Once the goals of the business are clear, it is time to take action based on those goals. Every employee involved in the business needs to be informed of the goals of the company. Thus, everyone could contribute in the success of the business.
In order to keep track of the progress, regular meetings should be conducted. It is essential to reward employees who work really hard and show efforts to achieve business goals.
In reality, not every goal gets accomplished according to the plan. From time to time, we have to overcome barriers that may prevent us from reaching our goal.
Along the way, we may realize that our progress is slower than we anticipated. If such problem occurs, we need to find out the reasons of the problem and try to solve the issue. The solution to the problems may require adjustment to our plans. Ideally, we must be ready to adjust our short term goals in order to reach our long term goal.