Are Your Goals S.M.A.R.T.?By Brian M. Schonfeld, CLP
Everybody knows that setting goals is imperative in making sure your business is heading in the right direction, whether it is a Fortune 500 company or a one-man brokerage. Goals give both you and your company direction, and without them you are just a ship without a rudder – drifting helplessly at the mercy of the elements. To avoid crashing on the rocks or going in circles forever, you need to make sure the rudder of your company is firmly attached – and that means creating solid business goals.
Knowing that you have to create business goals is a no-brainer. Figuring out what those goals should be however, and how to implement them, isn’t as obvious. Especially in this struggling economy, taking the time and resources to establish, and more importantly track, your business goals can be a tough pill to swallow. Consequently most business owners and managers don’t take the time. In fact, more than 80% of the 300 small business owners surveyed in the recent 4th Annual Staples National Small Business Survey said they don’t keep track of their business goals; and nearly three-quarters (77%) have yet to achieve their company vision. (Inc.com).
When creating business goals, it is important to ensure sure they move you and your company towards your long-term objectives. These long-term goals should have a timeline of three to five years, and reflect your company’s mission statement – the reason your company was founded. But how do you achieve these long-term goals? How do you draft effective goal statements that will help you grow your business? In order to effectively accomplish these goals, you will need to create solid short-term ones to help you along the way
To create effective short-term goals, make sure they are S.M.A.R.T:
First, make sure your goal is Specific. Many goals are well thought-out, but too ambiguous to effectively measure and track the progress made. Short-term goal objectives should describe the five W’s…who, what, when, where, and why. “I want to increase gross margin next year” — is not specific. “I want to increase my company’s gross margin 10% in the next twelve months” —is. Having a specific goal makes it much easier to measure, which brings us to “M” – make sure your goal is Measurable.
An effective S.M.A.R.T. goal is one that is measurable; and should include numeric or descriptive measures that let you and your staff know when your goal has been successfully met. Focus on elements such as observable actions, quantity, quality, cycle time, efficiency, and/or flexibility. Lacking these specifics can make tracking the progress of your goal difficult. For example, a 10% company-wide increase in gross margin over 12 months would mean that each month’s gross margin target could be measured against a specific goal.
Your goal should also be Action-Orientated. In other words, specify what actions should be taken and by whom. If specific responsibilities are not assigned, your staff will just assume the responsibility lies with another employee and nothing will be accomplished. Additionally, having individual employees responsible for specific segments of your goal will allow them to feel a greater sense of commitment and accomplishment if and when those goals are achieved. If you are the sole owner and employee of your company, make sure you still spell out what needs to be done and attach a deadline to it. For the same reasons you spell these actions out for your employees (responsibility, accomplishment), so should you spell them out for yourself. Having an external reminder of what needs to be done will help keep you on track.
Is your goal Realistic? Do you have the resources (employee & financial) to achieve your goal? Just as having no goal can hurt your business, so can setting an unrealistic or unattainable goal. Continuous failure can discourage the implementation of future goals and set you back. If your goal is not realistic, adjust it so that it is not only achievable but moves you towards your long-term goals. It’s great to shoot for the moon, but if you know you’ll never even leave orbit it’s the same as not having a goal at all. Additionally, continually setting unachievable goals will over time have a negative effect on company morale.
Finally, make sure your goal is Time-Specific. In my humble opinion, a deadline (self-imposed or external) is the most important element of any goal one sets. Without this pressure to complete your goal in a timely fashion, there is no imperative to commit the time and resources necessary to accomplish that goal. You want to give you and your company time to achieve your goal but have a deadline – otherwise you risk never achieving it. Taking our early example of increasing company gross margin by 10%, we have a timeline of 12 months.
Creating goals is not easy, and making them relevant, relatable, and realistic is even harder. But doing so is essential in ensuring that the internal vision you have for your company comes to fruition. When creating company goals or objectives however remember the S.M.A.R.T. acronym. This will help you create effective goals and helps ensure that both supervisors and employees share the same understanding and clarity of goals set.