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How to set realistic business goals

How to set realistic business goals

Setting realistic business goals can help create a roadmap towards your larger aspirations and achieve long-term success. Here are some tips to keep your business heading in the right direction.


 

What makes a realistic goal?

Such goals will, by nature, be clearly defined and easily understood, but there are several other elements that are essential to setting realistic goals. One popular technique for coming up with effective business goals is the SMART method, which breaks down as:

  • Specific: Have a clear idea of exactly what you want to achieve. ‘Make more money’ isn’t very specific. ‘Increase revenue from sales’ is better.
  • Measurable: How will you measure progress towards the goal, and know when it’s been met? A measurable goal might be ‘increase profits by 4 per cent each month’.
  • Attainable: The best business goals strike a balance between being completely impractical and being achievable. This way they are more likely to be met, but will still help expand your skills – in finance, team leadership, strategy and other areas.
  • Relevant: Is the goal relevant to what your business does, and to the market overall? This can simply be about getting your priorities in order. If sales of a product are falling because it has become obsolete, increasing the sales of that product may not be as relevant as finding a suitable replacement source of revenue.
  • Time-bound: A specific deadline is a key part of successfully setting and reaching goals. Just make sure it’s achievable – very few people have been able to build a multimillion-dollar business from scratch in just one year, for example.

Think beyond the numbers

Understandably, most business owners set goals that revolve around specific revenue and earnings targets. But it’s important to remember that what looks good on paper will only work in practice if your employees are on board as well. Asking them to work 12 or 14-hour days is likely to backfire unless you also have some kind of compensation plan in place.

If working towards the goal involves putting extra stress on employees, you could:

  • Negotiate a profit sharing, equity or partnership arrangement with them.
  • Provide additional paid leave to make up for the extra overtime.
  • Organise special perks, such as ordering pizza or arranging a day trip or Friday drinks.

Options such as profit sharing can help employees take ownership of the business’ success over the long term. It’s also important that you effectively communicate to staff the value to the organisation of reaching the goal, and how it will end up benefiting them as individuals.

Realistic goals are the key to long-term business growth. By forcing you to look ahead, they can make you more adaptable to changes in the market and better able to protect your business against risks.

Once you have your goals in place, it’s important to stick with them. Here’s how to maximise product development opportunities.

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