When you first start out in Business your only goal may be to make enough money to survive, with little to no forward thinking or planning. Unfortunately, I think that many business owners still think that way regardless of their size, revenue or business offering. However having goals for your business is a great way of motivating staff, providing a clear direction and businesses with clear, measurable goals tend to be far more successful than those who simply drift along.
Business owners should not fear setting goals or projections because there is absolutely no downside to doing so. Also, it is important to remember that goal setting doesn’t have to be only about revenue. It could relate to innovation, employee retention, service offerings, or anything that is important to enhancing your business. Here are five reasons why you should be setting goals for your organization:
1. Goals are powerful—they can focus attention on achieving desirable outcomes. In business, one desirable outcome could be profitability. Profitability does not happen without making sales, plus correctly managing expenses. Employees prefer to know what management expects them to accomplish, and goals provide that direction.
2. Measure Success – Good organizations should always be trying to improve, grow, and become more profitable. Setting goals provides the clearest way to measure the success of the company. When you are looking at your company from a three- or five-year perspective, you are looking beyond the tactical side of your business and instead taking a much more macro view, which allows you to see the company from a competitive, business vertical or economic perspective.
3. Leadership Team Cohesion – Setting goals ensures that everyone understands what the prize is and what they are working towards. When your leadership team clearly understands what you are trying to accomplish it provides greater rationale for the decisions you might make regarding hiring, acquisitions, incentives, sales programs, or any other financially-driven decision. This will eliminate a lot of the uncertainty that goes with not understanding the goals of the company.
4. Knowledge Is Power – When your goals have been defined, you can develop a deeper understanding of the effects of tactical decisions and how they play against the strategic goals. For example, when you have a budget that considers revenue to expenses, you will better understand the implications of a major purchase or winning a large new client. I have long believed that information is power and the more you know, the better decisions you can make.
5. Reassess Goals Mid-Year – When you set goals early and continually monitor your business against those goals, you can change course mid-year or when necessary. For example, say you have set your growth revenue goal at 20 percent from the previous year, but midway through the second quarter you find that your financial projections are not tracking like you had expected. You can modify your revenue and expense targets to reflect how your business is trending. If you hadn’t set the goals, this type of information is not as apparent and decisive action is more difficult.
It is incredibly important to remember that setting business goals will not ensure success for any business. However, there’s also a lot to be said for not flying by the seat of your pants. Taking the time to look at your business will give you greater confidence in what lies ahead. We can’t predict the future, but we can certainly plan for it.
This year we have set ourselves the massive goal to add $1,000,000 dollars to our clients bottom line. Through cost reduction, tax minimisation, process improvement and the identification of business opportunities. This is something that the whole team is working towards and ensures everyone focuses on adding value to clients, ensuring behaviours of staff and reflective of our beliefs.
To find out more about our $1,000,000 challenge click here
If you are looking for other resources to help you improve your business performance check out our free resources page, it’s full of useful guides, checklists and tools you can download.