As we head into the new year, many of us start thinking about our New Years' resolutions and personal goals for the coming year. And if you're a small business owner, that's especially true — in a survey of Found customers, we learned that a whopping 97% of small business owners set goals for their business, including 86% who set financial goals.
A business goal is a predefined target that you set for your business to achieve, typically within a specific time frame or by a specific end date. Your small business goals define where your business is going and how to get there. They provide specific targets to aim for, give meaning and direction to your day-to-day activities, and can directly impact motivation.
In this article, we’ll explore what a small business goal is and why they’re so important. Then, we’ll provide some tips to help you set your own small business goals.
Business goals can be broken up into short-term and long-term goals. Short-term goals are typically anything up to a year out, while long-term goals can be anything up to five years (or longer). These time spans are somewhat arbitrary, and certainly not set in stone, but they’re useful to frame your thinking—short-term goals often require a different mindset than long-term.
Short-term goals are those that will take less than a year to accomplish. These goals and objectives tend to be concrete and actionable. They often represent steps towards a larger, long-term goal. Short-term goals help give direction and focus to your day-to-day business activities.
Some examples of short-term goals might include:
Grow client/customer base
Build an online presence
Long-term goals are those that take more than a year to accomplish. They could be one-to-three-year targets or even longer-term visions. These goals give direction and help set the course for your business over the next several years, as well as provide a framework for your short-term goals.
Examples of long-term goals include:
Achieve financial stability
Open X additional locations
Prepare the business for potential acquisition
Whether you’re looking to make the jump to self-employment or you’ve been in business for years, setting excellent goals is key to running a successful business. Let’s look at the benefits of proper goal-setting.
If you don’t know what success looks like, you won’t know when you achieve it. Therefore, one of the most important reasons to set goals for your business is to set the targets that you’re aiming for.
Defining success by writing down your goals has some additional side benefits, too: people that write down their goals are 42% more likely to achieve them. That’s huge, especially for something so simple.
Your goals give you something to set your sights on so that you can stay on course through the twists and turns of business. Whether you need something to give you focus during the frantic rush of day-to-day activity, or you need to chart a path through the ups and downs of the market, goals help provide this crucial sense of direction. Without them, it’s easy to get lost in busyness and accomplish a whole lot of nothing.
As your business grows and you bring staff on board, it becomes increasingly important to keep everyone on the same page. It also becomes increasingly difficult—competing daily priorities across teams can mean that everyone is working towards their own goals and getting in each other’s way.
Clear goals ensure that everyone is following the same map to the same destination. This can be the difference between success and failure.
Goals help maintain accountability for yourself and your employees. Once you’ve set goals for your business, you can break them down further and assign responsibilities to individual employees. This then gives you a measure of their performance and whether they need additional support.
Finally, your goals give you a framework for making decisions and setting priorities within your business. When a situation arises and you’re not sure which direction to take, you can use your goals as guideposts to help you decide.
Now that you know why you need to set goals in your small business, your next step is to get started! Let’s explore the ins and outs of small business goals and practice setting one using the SMART framework.
You may be familiar with this idea from Stephen Covey’s “7 Habits of Highly Effective People.” This is an important aspect of goal-setting—start out by envisioning the outcome. Rather than focusing on your current situation and trying to work out steps to an outcome, start by envisioning the big-picture, and then work backward from there.
Using a framework to set your business goals helps ensure that you cover all the bases and create a goal that’s actually achievable (and will move your business forward). The SMART framework is a proven and powerful tool for goal-setting.
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. These are the criteria your goal should meet to be effective. Let’s walk through each one by one.
This one’s pretty straightforward. To be effective, a goal needs to be specific—otherwise, how will you know when it’s accomplished? Consider these questions as you set your goal:
What does success look like?
Who needs to be involved?
How will you reach this goal?
Let’s use one of our examples from above—to grow our client base. That’s pretty vague, right? A more specific version might look like this:
Grow client base by optimizing your online ad campaigns and conducting more direct outreach.
We now know exactly how we’ll accomplish this goal.
Your goal needs to be measurable—otherwise, how will you know when you’ve achieved it? “Grow customer base” is too vague—if you add one new customer, have you reached the goal? Or do you need to add 20 customers, or 100?
Let’s take our goal and make it more measurable:
Add five new monthly retainer clients by increasing the click-through rate of our Facebook ads and conducting follow-ups with all past and current customers.
We now have a clear idea of how we’ll measure progress. We need to increase clicks on our Facebook ads (in other words, get more people to click them) and go through our client list to see if we can sell any of them a monthly retainer package. We’ll know we’ve achieved the goal when we increase our monthly retainers by five.
We’re often told to set big, audacious goals and shoot for the stars. While these sort of ambitious goals certainly have their place, in business we want to make sure we set ourselves (and our teams) up for success. To that end, ask yourself—is your goal realistically achievable? Can you actually do this thing?
Looking at our goal, it may be that our Facebook ads already have an exceptional click-through rate, and increasing that further may be exceedingly difficult or expensive. Or maybe you don’t have the reach and existing customer base to add five new retainer clients, so three may be more realistic.
So, with that in mind, let’s adjust our goal some:
Add three new monthly retainer clients by increasing the click-through rate of our Facebook ads and conducting follow-ups with all past and current customers.
Next, we want to zoom out a bit and consider how this goal fits within the scope of our larger business objectives. In other words, why are you doing this?
In the case of our example goal, let’s say your monthly revenues have more variance than you’d like, and getting clients on retainer will help smooth out these bumps and let you more accurately project cash flow. This, in turn, will help you move toward your long-term goal of achieving financial stability.
That sounds pretty relevant, so let’s update our goal to reflect this:
Add three new monthly retainer clients by increasing the click-through rate of our Facebook ads and conducting follow-ups with all past and current customers. These monthly retainers will help ensure consistent cash flow and in turn, will move us toward our long-term goal of financial stability.
Finally, your goal should be time-bound. This means that you set a clear time limit on how long you want to spend reaching this objective to consider it a success. Adding three new clients in 3 weeks might be an impressive, if unrealistic, goal. On the other hand, adding three clients in three years might not even be a goal worth considering—there’s no challenge or push there.
Let’s update our goal with a challenging but achievable timeframe:
Add three new monthly retainer clients in the next three months by increasing the click-through rate of our Facebook ads and conducting follow-ups with all past and current customers. These monthly retainers will help ensure consistent cash flow and in turn, will move us toward our long-term goal of financial stability.
We now have a clear, achievable goal that we can use to drive our daily decision-making processes. Follow this procedure for each new goal you set to really get the needle moving!
Speaking of financial stability—the right small business banking and accounting software can help you worry less about your finances and focus more on achieving your other business goals. Check out Found’s smart, simple banking today.
This material has been prepared for informational purposes only.
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