Determining what your business goals are, along with how best to measure them, sits at the core of any good business strategy. Whether it’s sales, human resources, training or sustainability, you need a way to determine your own growth. While larger businesses might be adept in the process, small businesses are quickly catching on to the importance of implementing enduring strategies to successfully scale their operations.

You don't run a business for participation trophies – you're in it to succeed! But that raises a few interesting questions: what does success look like? Is success for a small business or local business the same as success for a larger corporation? Does the bottom line determine success, or are there other variables at play?

But it has to start somewhere. Goals are only as good as the ability to implement, sustain and measure them. For small businesses, it’s important to find the balance between realistic goals and audacious dreams.

Setting Goals

The nature of a business is that there is never just a singular focus, there's human resources, inventory management, customer relationships, sales and production all to think about, among others. Setting the right goals helps you crystalize your focus and put attention where it needs to be.  

Step 1: Preparing to Set Goals 

A business plan forms the backbone of business goal setting. Performing a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis will reveal aspects of your business - or even a future business - that are key elements in goal setting. For instance: 

Step 2: Understanding Different Types of Goals 

SMART (Specific, Measurable, Achievable, Relevant, Time-Bound) goals allow you to create measurable goals that keep you accountable to a strict timetable.

• Specific - Define what needs to be done, what is needed to do it and who will manage the process  
• Measurable - Set a number or a benchmark that needs to be reached  
• Achievable - Determine whether you have the right resources to make it happen 
• Relevant - Ask yourself whether the goal will matter to the business in the long run  
• Time-Based - A timeline is necessary, not just so you have an end-goal in mind, but also to set measures in place to remain on track

Some goals are small and immediate, others are long term. Different goal types and their properties include:

Step 3: Putting it All Together 

Once you've analyzed your business and decided what type of goals make sense, you can develop a matrix of goals. Your goal matrix should include:

• An overarching goal - A key vision for your business. This is often quantitative.  
• A series of performance goals for output, growth and success - These should address the key areas of your business. You should have separate goals for each aspect of your company. 
• A high-level plan for how to achieve those goals - This will usually include some process goals, perhaps in the form of a Gannt chart.  
• A way to measure your goals - these are your key performance indicators (KPIs). You can use business calculators and reporting tools to help measure these. 
  

Using KPIs In Goal Setting

KPIs get in the nitty gritty of setting goals by measuring the performance of a product or service. These are like the report card for goals you have and help you get a read on where you're going as a business.

A marketing KPI might include a measure of branded search traffic to your website which helps identify your brand awareness. You may set a KPI for "Increase in Sales" to determine how well a new product is penetrating the market, while financial calculators like profitability ratios help you determine the efficiency of your operation.

Not Everything Deserves To Be Measured 

While KPIs are important, it’s not enough to fire off emails to everyone with the latest statistics on just about everything in the business. KPIs are most effective when they’re measuring the elements in the business that help you improve your bottom line, boost your service levels, keep your staff happy and provide you with enough information to set future goals.

An example of an effective KPI is measuring which customers are the most profitable, not necessarily which clients have the highest net asset value. For instance, you might have a corporate customer that purchases in bulk, but because of the bulk buying receives a hefty discount. Another customer might not be as big or buy as much, but the profit margins are higher. By simply focusing on onboarding more clients like the latter, you could drastically change your bottom line.

When To Change Your Goals

A good leader will know when to stay the course or when to take another look at those goals and perhaps follow another direction.

The Bottom Line

Not having goals in place leads to stagnation. Setting targets and monitoring your progress against them drives your company forward. As you consistently assess the measures that make a difference to your bottom line, staff morale and client satisfaction you are able to optimize your operation.  

It helps to have a bank at your side that understands business needs. Get business planning help and treasury management services from National Bank of Arizona.

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