Chances are you’ve heard entrepreneurs reflect on their business success. Do you recall any of them saying anything along the lines of, “I don’t know how it happened, but hey, here I am”? Of course you don’t—because successful entrepreneurs don’t think that way.
Business leaders set measurable goals to guide their decision-making and propel their businesses forward. Here’s how you can use this goal-setting process for your own small business to aid your strategic planning.
What is a business goal?
A business goal is a benchmark you set as an entrepreneur or business leader that gives you a point of reference to measure success. A business goal can be a financial goal, such as hitting an annual revenue target. It can be an industry-related goal, such as capturing a percentage of market share. It can be a brand reputation goal, such as topping customer satisfaction surveys.
Business goals differ slightly from business objectives. Traditionally, a business objective is specific and short-term, while a business goal extends over a longer time frame. For instance, a sales team might pursue the business objective of getting a product into a particular retail store, which serves a broader business goal of boosting market share by 50%.
What are SMART business goals?
“SMART” is an acronym that stands for “specific, measurable, achievable, relevant, time-based.” When business goals fit these criteria, they’re more likely to lead to real progress. For instance, a company could say that its financial goal is to increase profits, but this goal is neither specific, measurable, nor time-based. If the company refines the statement to specify a short-term goal to boost revenue by 15% in the next quarter, the goal suddenly meets those criteria. Companies that pursue SMART goals focus on tangible, quantifiable achievements that advance their business plans.
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Short-term vs. long-term goals
Entrepreneurs and corporate strategists often pursue a blend of short-term business goals and long-term business goals. Both short-term goals and long-term goals exist to steer an organization in the right direction and improve its future state. Each type of goal provides a marker a company can use for measuring progress.
Short-term goals typically refer to goals a company wishes to achieve in one year or less. For instance, many companies set quarterly goals for revenue and profit growth. Others set weekly sales goals. Examples of short-term goals include:
- Increase the next quarter’s profit margins by 15%
- Have 90% employee retention for the year
- Obtain a license to operate in a new state by the end of the month
A long-term goal traditionally extends beyond one year’s time. It may describe what the company views as a sustainable state for years—even decades—to come. Examples of long-term goals include:
- Shift to a fully online business model within two years
- Increase shareholder value by an average of 10% every year
- Enter a new industry in response to a redrafted company mission statement
Shopify Learn: Goal-setting
Goal-setting helps you get clear on what is important to you. Watch and discover the three benefits of setting goals for your business and for your life.
3 types of business goals
- Financial goals
- Growth goals
- Operational goals
You can group goals into three main categories. Each serves to improve your company’s future prospects and ensure success. These three categories are:
1. Financial goals
2. Growth goals
Growth goals relate to the expansion of a business. They include gaining market share, expanding into new markets, extending product lines, improving product positioning, and building brand awareness. Growth goals support a company’s existing business. For instance, a company seeking to boost its customer base can’t only focus on new clients. It must also work on customer retention.
3. Operational goals
Operational goals, or process goals, involve the core functions of a business. They focus less on what initiatives your company takes and more on how it goes about doing them. Operational goals may relate to improving efficiency and eliminating redundancies across departments. Others may focus on sustainability, such as an initiative to increase employee satisfaction or improve customer satisfaction.
5 tips for setting good business goals
Consider these five tips as you work to optimize your business goals:
- Tie your goals to measurable results
- Let your business goals inform decision-making
- Understand what your company is and what it isn’t
- Survey your team
- Revise your business goals as your company evolves
1. Tie your goals to measurable results
Successful companies use hard data to track progress toward their goals. Monitor key performance indicators (KPIs) to measure revenue, growth, employee satisfaction, and customer satisfaction. Personal intuition can play a role in business strategy, but respect the information you get from these key results.
2. Let your business goals inform decision-making
Your goals should directly link to the work your company does every day. Tie a business goal such as “expand brand awareness” to something tangible, like increasing your follower count and engagement rates on social media platforms. A goal that isn’t linked to action is harder to achieve.
3. Understand what your company is and what it isn’t
Your business goals must align with a realistic perception of your brand, your product lines, and your target audience. A mid-sized US-based ecommerce company could reasonably set a goal of shortening its domestic shipping times. Less reasonable would be setting a goal of opening retail locations in Singapore. Set goals that allow you to grow your business one step at a time.
4. Survey your team
Entrepreneurs and executives don’t have a monopoly on ideas for setting business goals. Your team members, from the marketing department to the sales department, might have insights into the business that you’d never come to on your own. When appropriate, include them in brainstorming and decision-making processes.
5. Revise your business goals as your company evolves
Companies change over time, whether that means expanding their footprint or revising their mission statements. When these changes happen, it’s only natural for business goals to change with them. Embrace the changes and challenges of new goals.
Business goals FAQ
How often should business goals be reviewed and revised?
Review and revise your business goals throughout the lifespan of your company. Mission statements evolve, consumer tastes change, and technology enables new possibilities. It’s natural for your company to pivot to new goals as a result of these changes.
How do you measure progress toward business goals?
Many companies choose to measure the success of business goals by using five key performance indicators (KPIs), which are revenue growth, profit margin, customer satisfaction, productivity, and employee retention. You may be pleasantly surprised to discover how many business goals naturally align with one or more of these KPIs.
How do you align individual employee goals with overall business goals?
Employees may be more likely to invest in overall business goals if they view themselves as stakeholders. Hold regular meetings—department meetings as well as all-hands meetings with the entire workforce—and solicit employee input. Consider issuing surveys that directly ask your employees how their personal achievements align with company achievements. If workers feel they are part of the conversation, they may be more excited about contributing to company-wide goals.