Every good thing starts with a goal. And every small business owner or entrepreneur that wants to make headway in any industry should set SMART goals. This is because, without clearly defined and achievable goals, progress and development will hardly occur.
Therefore, setting goals as a startup is considered an incredibly powerful process for thinking deeply about your ideal and immediate future. And for motivating yourself – and your team to turn that vision you have about your business into a reality.
As an astute entrepreneur or small business owner, it is very essential to know what you want. However, it is more important to know where you want to go as a brand. And goal setting the SMART way – and a crystal-clear vision – can help your startup get there. It will show you where you need to put in more efforts and highlights the distractions that beset you or lead you astray.
But then, the types of goals you set, how well you communicate them with your team, how united your team is around the goals, and how efficiently your team acts on them will readily determine the effectiveness of your goal-setting process as well as the return on investment in goal setting.
In this article, you will discover the unique power of setting SMART goals, the importance of key performance indicators and the benefits of tracking. You will also learn how to make adjustments accordingly in order to take your startup to the next level.
Setting SMART Business Objectives
Business objectives are usually linked directly to time-bound and quantifiable measures of what you want to achieve in the next 3-5 years. A growing business needs to be carefully and closely managed in order to ensure the success of new investment decisions as well as expansion plans.
Your business goals set the stage for what your brand will achieve within a specific period. They are practically the foundation of any business strategy you want to deploy.
Every business goal is achieved in a series of steps. You should have both short-term goals and long-term goals. Each should have a specific period within which they must all be accomplished. And afterwards, you can set new goals.
Every goal must have a SMART nature in its genes. 'SMART' is an acronym that means: Specific, Measurable, Achievable, Relevant, and Time-bound. Your team should always be mindful of these SMART goals. And they should set the pace and focus for each day.
How to Set Goals the SMART Way
Every small business that wants to go places must have a team, no matter how small. Well-trained teams help to drive businesses. But if you want your team to be much more efficient than they are, you need to set practical goals for your team.
This is how to go about setting achievable goals:
Make Your Goals Tangible by Writing Them Down
There is nothing more memorable than committing something to paper. Whatever goals you create, write them down with a pen. The actual activity of writing down your business goals helps to commit them to memory. And when you are done, paste them in a visible location – such as your notice board - in order to keep them always at the top of your mind.
Some individuals in your team may prefer using sticky notes or lining their desktop monitors with ‘Post-it’ notes. Others may love writing their goals on whiteboards with markers. You do not have to be so finical about how your team members choose to take note of the goals.
But you need to ensure that they have the tools they need to work at any time or whenever they want. Remember, writing down your goals makes them feel very tangible.
Ensure the Goals are Measurable
Goals are pretty useless for any business if there is no way to measure them. Even if you say or believe that your goals for the month are successful, if you can’t measure them, then they are worthless. This is where KPIs (key performance indicators) come in. KPIs will be discussed subsequently in this article.
Measurable goals should be quantifiable. For instance, how do you define success as regards the implementation of your business goals for the month? Did you convert a few users to leads or paying customers? Did you hire two extra specialists to help drive your brand to the next level?
This is why all the goals you set for your business should be SMART (that acronym again, right?). The SMART goal framework is as follows:
Specific: How clear are those goals? Can a third-grader understand them and what you want to achieve? Unclear goals can give your team a severe headache.
Measurable: Is there a way you can measure the progress of the goals you have written? Do you measure progress in dollar signs, the number of leads generated per month or sales made every week?
Attainable: Any goal that is not achieved remains a pipe dream.
Relevant: All your goals must be highly relevant to your brand and its objectives. Do not create goals that will make your team run in circles and not achieving anything worthwhile in the long run.
Time-bound or time-based: Set a highly reasonable time-frame for every goal you create or set up. Sort the goals that can be completed within a week, month, quarterly, or yearly. Then get your team working on them.
Start Taking Small Steps
Big things, they say, start from small things. Anything worthwhile or achievable starts with a few baby steps. If you bite off a huge chunk at once, you may find it challenging to chew it. The dream works only if the team works.
If your goal is to bring in a particular amount such as $3 million by the end of the year, you need to break down this goal into much smaller ones.
For instance, to earn up to $3 million within a year, divide that amount by 12 months. This implies that you will need to make at least $250,000 to meet the goal of making $3 million in revenue by the end of the year.
Divide $250,000 by 7 days: you will arrive at $35,714.29. This is the amount of money your brand needs to earn every week in order to make up to $250,000 per month.
You should adopt this method for any long-term goal you set for your team. Ensure you carefully layout all long-term goals. Break them down and let each be tackled day in, day out.
Use Incentives to Motivate Your Team
Having an incentive structure can significantly promote progress through numerous rewards. It always feels good to achieve specific goals. And it feels much better to earn rewards for hitting a specified target. However, the incentives may vary, depending on your team’s dynamics and goals.
Different teams have different dynamics. Some succeed from the intense competition while others may benefit from collaboration.
Let's say your marketing team succeeds in getting a specified number of leads within a month or turn some leads into high-ticket clients. They may expect a raise or bonus in that following month's paycheck.
And if no team achieves anything worthwhile, no one gets any rewards. The incentives should be mouth-watering enough to engender a competitive – but friendly – spirit among your team.
Always Praise Success Publicly but Criticize Privately
And when your team hits a worthwhile target, praise each team member publicly, especially those who put in their best to succeed. No one is immune to praise, and if done correctly, it can spur the individual to give it their all in order to achieve those objectives.
If any member of your team is slacking off in any way or does a task rather poorly, do not criticize or reprimand them in public. Always criticize privately, for some individuals can be overly sensitive if you pick them apart in public.
You don’t want to breed unnecessary animosity among the members of your team. And every person in that team has their strengths and weaknesses. So, work with them according to their capacities. Praise their strong points and assist them in their weak points.
Set Other Achievable and Measurable Goals
As soon as you have a set of goals, stopping there will stagnate your business. This is why, as soon as you accomplish a set of goals, you should create another set of goals that will take your brand to a higher level.
Of course, you need to ensure that your team has the necessary tools, knowledge, and resources they need to make their jobs easier. And if they don't, make moves to secure the tools by signing up for paid subscriptions or using free alternatives.
The best way to go about this is to have several business goals lined up in advance. As long as the goals are in your team’s line of sight, they will keep achieving them with the right tools and incentives.
Key Performance Indicators (KPIs): What Are They?
Key performance indicators (KPIs) are highly measurable and quantifiable values that easily demonstrate how efficient or effective an organization is in achieving crucial business goals or objectives.
Brands use KPIs at several levels to measure their success at reaching specified targets. Some high-level KPIs focus on the overall performance of the establishment. Those considered low-level KPIs may center on multiple processes in departments such as marketing, sales, support, HR, etc.
Key performance indicators for startups are essential for the following reasons:
To measure the progress of a business over time.
To keep track of an organization’s health.
To tackle opportunities or solve problems.
To stay on track and make adjustments where necessary.
To study patterns over a specific period.
How Effective are KPIs?
Before discussing KPIs' effectiveness for your business, it is vital to know the 3 major characteristics of KPIs. They are:
Practical: This means that KPIs must be well integrated with your brand’s existing processes.
Quantitative: KPIs can be ably presented in numbers form.
Actionable: KPIs can be easily put into practical application in order to effect desired changes.
For a key performance indicator to be highly effective, it must be based on legitimate data. It must also readily provide context that easily echoes your business objectives or goals.
KPIs should be set up so that any external factor beyond the full control of your brand shouldn't interfere with them in any way. Moreover, KPIs should have a specified time-frame that is easily divided into vital checkpoints for accuracy.
Examples of Key Performance Indicators
Bear in mind that a company’s KPI is not the same as its goals. For instance, a business may decide to use percentages of income it generates from its returning customers as its key performance indicator.
Other examples of key performance indicators used by many different businesses include:
The status of existing clients.
The length of time for stock-out.
Customers segmented by demographics or profitability.
The number of new customers/clients acquired, etc.
Choosing KPIs for Your Business
Before choosing the best KPI for your business, you need to take some steps. And these include:
Setting adequate requirements for business processes.
Full establishment of well-defined business processes.
Having quantitative and qualitative measurements of valid results.
The determination of discrepancies as well as adjustment processes in order to meet short-term goals.
Guidelines to Follow When Choosing KPIs for Your Company
When choosing your KPI, your organization should, first of all, consider the several factors the leadership team employs in managing the company. Then, identify and consider whether the factors help evaluate the brand’s progress against explicitly stated strategies.
And lastly, make sure the key performance indicators you select are apparent enough. This is to ensure that any person who reads the reports will understand them. People within the company – and outside – can easily make corresponding assessments.
No rule of thumb says you must choose KPIs that are similar to your competitors. This is not to say that industry standards don't have any significance because it does.
However, it is more important to know how relevant the chosen indicators are to your business or the division you are evaluating.
Moreover, a startup does not really need a particular set of key performance indicators. However, the number of KPIs usually range from 4 to 10 for most businesses in general.
Whichever number you decide on is your business, as long as they remain vital to its success. Be as selective as you can.
Tracking and Adjustment
As you know by now, KPIs help tracks the progress or growth of a startup over time. You can use KPIs to measure your company's progress towards the goals you've set.
And if you find your business in danger of missing your pre-set targets, you can make necessary adjustments. These crucial adjustments will put you back on track so that you can achieve the goals or objectives you have set for your startup.
The Mistakes Some Companies Make When Selecting Key Performance Indicators
One big problem with KPIs is that it is too easy to set your business on the wrong ones. As a shrewd entrepreneur or small business owner, you must to be wary of this. Do your best to avoid the common mistakes that other companies make when selecting key performance indicators.
Therefore, what should you look out for to avoid making those grave mistakes? Here are 3 of them in no particular order:
Establishing Irrelevant Aspects as KPIs In many cases, some companies' management begins to measure those aspects that are very irrelevant or not as relevant as other entities. You can avoid this scenario in your startup when you work backwards from your stated goals. You will never miss any step when you do this. And you can be assured that you will not finish with the wrong indicators in any way.
Creating KPIs without Support from Staff or Management It is not really uncommon for stakeholders to set up KPIs without the full knowledge of the management. This usually happens when too much focus is on the quest to achieving goals. But the truth is that staff buy-in is just as important as setting the right key performance indicators. This is because the management will be the ones who will act on those KPIs. This is why you should consider getting your staff on-board right from the get-go. They should be actively involved in setting up the entire KPI process. Your staff will be aware of everything that needs to be done and will be more than willing to give it what it takes to achieve success.
Looking for Perfect KPIs Key performance indicators are rarely perfect measures. The best any small business owner can hope for when using KPIs is a close-enough answer. A key performance indicator's primary objective is to inform you whether you are on the right track or not. Or let you know just how far you have wandered off the proverbial path. Whatever KPI you choose, they should be powerful enough to provide a near-accurate data. This data, in turn, will help you to make very informed decisions. Therefore, do not worry if you do not get it right at first. Keep using KPIs as part of continuously improving business strategy. And you will soon get the hang of it.
As you can see, goal setting is crucial for any startup that wants to grow and thrive. Goals that entrepreneurs or small business owners should set must be specific, measurable, achievable, relevant, and time-bound.
One way to measure the growth of any startup is to set key performance indicators in place. Using the right KPIs for your business is vital, even though your company's goals generally determine them.
Bear in mind that KPIs are nothing but tools that must be used to achieve whatever results you want. And do not hesitate to discard them as soon as they become useless or outgrow their utility.