Success in the world of small business is rarely the result of good luck. Small business owners must take an intentional approach to growth and development, setting goals and developing actionable plans for achieving them.
Easier said than done, right? Don’t worry: We’re here to help. In this article, we’ll explain how you can use a popular goal-setting method, called the “SMART” framework, to set goals for your own business. We’ve also provided you with examples of different types of goals to help get you started and give you a little inspiration. But first, let’s get back to basics and figure out why you need goals and what types are right for your small business.
Why Do I Need to Set Goals for My Small Business?
Whether you're in the planning stages or hoping to sustain or grow your business, goal-setting will be central to your efforts. Spend time determining your objectives for the year, and you’ll find that goal-setting can serve many purposes, including:
- Ensuring team members are aligned around the same goals and working toward a common purpose
- Helping you make important decisions about where to invest your resources
- Staying focused on the tasks at hand when managing conflicting priorities
- Building a framework for long-term success in the areas that matter most to you
To keep your goals top of mind and ensure that they influence your business’ long-term outcomes, regularly regroup to measure the results of your efforts and adjust your strategy.
What Types of Business Goals Should I Set?
Your business goals should encompass both the short-term and long-term success of the organization because they have a direct relationship with each other.
When establishing your long-term goals, it's important to keep in mind why you went into business in the first place. Was it to build wealth? Was it to slow down and work at your own pace? To make a difference in your community or world? To pass something on to your children or grandchildren? The initial motivation to start your own business serves as the foundation for your long-term goals. As an example, if you started a business to build wealth, you might have a goal of achieving specific revenues five years from now.
Once you've established your long-term goals, think of your short-term goals as milestones or building blocks to achieving your long-term goals. What will you need to accomplish in each quarter to reach your five-year revenue goal? What steps will you need to take or what boxes will you need to check to get there? These become your short-term goals. In the revenue example above, short-term goals might include building clientele, expanding the business to additional platforms, or growing your service line.
Long-Term Goal-Setting
According to Danielle Bilbruck, owner and principal strategy consultant at BROAD Digital Consulting, long-term goals should support two primary objectives:
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They should fulfill or support your initial reason for going into business, whether it's to build wealth, make a difference in your community, or something else.
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They should support your exit strategy; that is, how you plan to exit the business when it's time to retire.
Long-term goals are especially important because they're the real desired outcome behind your short-term goals and milestones. Your short-term goals should all come together to achieve your long-term goals.
A few examples of five-year business goals and other long-term goals include:
- Open five new stores across the U.S.
- Open a global office.
- Increase revenue by 10% within three years.
Bilbruck expands on that:
"The larger strategic objective or vision should come from an executive team and that will rarely be one person, especially if you have investors or stakeholders,” she said. “That strategic objective or company goal should guide everyone else on each team. But in my experience, you build better, more engaged teams when everyone feels like they have skin in the game."
Short-Term Goal-Setting
Short-term business goals break your vision for the business into bite-sized, digestible pieces, keeping you focused and providing rewards and motivation on the way to success. First-year business goals are especially critical in the sustenance of the business. Research by the U.S. Small Business Administration (SBA) showed that as much as 20% of small businesses fail in their first year, and 50% fail by their fifth year. Without a vision and a clear action plan, it can be nearly impossible to ride the wave and come out on top.
Generally speaking, your short-term goals are those you'd like to achieve in the next two years or less. Examples of one-year business goals, also called short-term goals, include:
- Rank on the first page of Google results within 12 months.
- Serve as a panelist at a conference to support our reputation within 24 months.
- Achieve a specific volume of monthly sales six months from now.
- Open a storefront within 18 months.
When it comes to goal-setting, there are no right or wrong answers. Ensure your short-term goals support your long-term objectives, and you'll set your business up for success.
What Business Areas Should I Set Goals For?
There's no central goal to all small businesses, so it's important to think about who you are as an organization, where you hope to go as you build your business, and what it'll take to get you there.
Key areas of focus include:
- Growth: Building your clientele, expanding your workforce, growing your reach, opening new offices, or expanding globally all address business growth.
- Operational: Operational goals include goals around efficiency, quality, product, service, or innovation. These goals can help ensure your business operates in a way that drives growth and revenue and organically supports customer and employee satisfaction.
- Profit: Nearly every small business should take revenue or profit into consideration when setting goals, as financial feasibility is critical for continued business. These goals might surround revenue, pipeline, expenses, or profit margin and typically increase over time.
- Customer Service: Customer service goals help you stay focused on meeting the needs of your stakeholders and typically include both customer satisfaction and retention measurements, as well as employee engagement measures when applicable.
- Social: Social goals address your desire to drive social change and might include goals surrounding your carbon footprint, efforts toward social justice, or community involvement.
Remember to incorporate key stakeholders when setting goals, and then clearly communicate those goals to the entire team who will work to help achieve them.
How to Set Small Business Goals Using the SMART Framework
Most business owners are familiar with the SMART framework for setting goals, but an in-depth understanding can help you set goals that have the highest chance of driving behaviors and decisions to accomplish desired outcomes.
In the SMART framework, goals should be:
- Specific
- Measurable
- Achievable
- Relevant
- Timely
Specific goals are clear. For example, rather than a goal of "grow revenue," you might set a goal of, "grow revenues by 10% from $500,000 annually during the 2021 fiscal year to $550,000 annually for the 2022 fiscal year." When you set specific goals, it's easier to determine what steps you need to take to achieve them—and then whether you've achieved them or not.
Measurable goals can be easily measured using data available to you. For example, setting an employee engagement goal before you've implemented an annual survey or another measure of engagement makes it difficult to determine whether your efforts have paid off. Measurable goals typically include a numeric factor: Increase by 10%, improve the score by 1.5, or increase profit by $10 million, for example.
While you may be tempted to set sky-is-the-limit goals, ensuring they're achievable is key to taking the steps necessary to get there.
Relevancy is also a crucial component of an effective goal. If you went into business with the single goal of bringing new and desperately needed jobs to your community, you might not set goals around decreasing full-time equivalent hours (FTE) or improving productivity. Instead, your goals should be focused on building revenue so you can continue to create meaningful, lucrative work for your neighbors.
Finally, timely or time-bound goals make the timeframe clear so you can take the right action at the right time to drive growth and development. How might a goal of opening another office change the way you work in comparison to a goal of opening a second location within six months?
When it comes to setting goals using the framework, start with the vision and then add/take away until you reach a goal that answers these questions:
- What exactly are you aiming to do?
- How will you measure success? By exactly how much?
- Is it possible for these people to achieve this in the timeframe and with the resources they have?
- How does this relate to your vision?
- When do you expect to achieve it?
30 Examples of SMART Business Goals for Small Businesses
These 30 examples of short- and long-term small business goals can help serve as a launching point.
15 Examples of Short-Term Goals for Small Businesses
Here are examples of great short-term business goals, organized by key focus area:
- Growth Goals
- Open a second storefront by Jan. 1, 2022.
- Serve customers in 15 states by Dec. 31, 2021.
- Build our pipeline to $3 million by Sept. 1, 2021.
- Operational Goals
- Improve efficiency by 5% from July 1, 2020, to July 1, 2021.
- Implement productivity software by Dec. 31, 2021.
- Develop and implement standard operating procedures by July 1, 2022.
- Profit Goals
- Complete a comprehensive analysis of expenses and identify opportunities by Sept. 30, 2021.
- Implement recommendations to achieve a 5% reduction in expenses by March 31, 2022.
- Increase gross revenues by 2% to $500,000 annually by the end of this fiscal year.
- Customer Service Goals
- Implement a customer satisfaction survey to measure customer response to products and services by June 30, 2021.
- Maintain a Better Business Bureau score of A+ through the end of the calendar year.
- Hire a quality assurance resource by the end of the fiscal quarter.
- Philanthropy Goals
- Increase charitable giving by 1.5% to $11,000 by the end of the 2021 fiscal year.
- Staff at least four community events this calendar year.
- Reduce carbon footprint by 1% this fiscal year over last.
15 Examples of Long-Term Goals for Small Businesses
Here are examples of great long-term business goals, organized by key focus area:
- Growth Goals
- Expand operations globally by Dec. 31, 2025.
- Obtain the market share in Virginia within five years.
- Sell the business for $2.5 million 10 years from now.
- Operational Goals
- Reduce safety incidents to less than five per year by 2026.
- Increase the productivity of X value stream by 15% by 2026.
- Increase product performance to 500 hours of use by 2027.
- Profit Goals
- Increase profit margin by 10% by 2027.
- Reduce expenses by 10% by 2026 without sacrificing quality or safety.
- Become the most profitable player in the industry by 2031.
- Customer Service Goals
- Achieve the highest customer review rating on online platforms by 2028.
- Increase word-of-mouth business by 15% by 2026.
- Build a high-value, customer-centric business that's sellable by 2031.
- Philanthropy Goals
- Set the bar for giving in our community by being the most charitable small business by 2025.
- Start a secondary non-profit organization to use our power for good by 2028.
- Give $1 million annually to United Way through employee giving programs.
Final Thoughts
Goal-setting is imperative for staying focused and prioritizing efforts. Bilbruck said her firm's goals help her make decisions about new ideas and initiatives.
"Will this help me or hurt me?” she said. “Does it get me closer to reaching this goal or does it take me further from the goal? Can I set this down and pick it back up later when I've achieved my goal? Setting goals keeps me focused and moving toward the objective, even when I [feel like I'm not] making progress."
Image courtesy of iStock.com/monkeybusinessimages