50% of businesses fail within the first five years. As an entrepreneur or a C-Level executive, this number is extremely disappointing.

Let’s have a look at the mistake most businesses make. Gaining valuable insight into one common error not only helps you keep your business afloat, but can skyrocket your revenue and profit margins.

So what is the big mistake? For many businesses, it’s not setting the right goals – or not setting them at all. Venture capitalist John Doerr said, “many of us are setting goals wrong, and most of us are not setting goals at all. A lot of organizations set objectives and meet them. They ship their sales, they introduce their new products, they make their numbers, but they lack a sense of purpose to inspire their teams.”

According to the 4th Annual Staples National Small Business Survey, most businesses don’t keep track of their business goals at all.

Often businesses wander aimlessly, not knowing what to do or how to get it done. Without the right goals in place, you’ll be steering your company in the wrong direction. It can lead to morale problems in the company, with staff feeling demotivated and directionless. Think of the goal-setting process as building a roadmap to success. 

Let’s dive straight into how to set the right goals in your business.

Follow these steps to set the right goals for your business:

  • Ask the why
  • Conduct a SWOT analysis
  • Get executive input
  • Determine your short-term and long-term goals
  • Ensure your using SMART goals

Ask the why

Truly transformational teams combine their ambitions with their passion and purpose. Based on that, they develop a clear and compelling sense of why. Examples might be:

  • I want to go to space.
  • I want to save the trees.
  • I want to help businesses grow.

Whatever the reason you launched your business, you should always be clear on your why. Moving forward, you will come across numerous hurdles and tackle countless challenges. One big mistake most business owners and founders make is forgetting the big picture.

You may have a dream to build a billion-dollar business. Or make it a trillion-dollar business someday. It’s not unusual, however, to find yourself caught up in day-to-day operations. When this happens, it’s far too easy to lose sight of the bigger picture.

Elon Musk would have never been able to go to space if, in 2001, he had considered his goal of colonizing Mars to be unrealistic. Fast forward 20 years, and he’s the world’s richest man, subject to change, and he’s launched his space program.

Your bigger picture is what will always drive you forward and help you set your short-term and long-term goals.

Conduct a SWOT analysis

To set the right goals, you need to be clear on where you currently stand. There’s no better way to do that than by conducting a thorough SWOT analysis. SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Threats.

Once you’ve conducted a SWOT and gained the necessary insight,  you can build clear and concrete company goals to drive you forward.

While SWOT is one of the most preferred goal-setting models, other popular options include Objectives and Key Results (OKR), Management by Objectives (MBO), and Big Hairy Audacious Goals (BHAG). In this blog post, we’ll be sticking to SMART goals.

Get executive input

Goal setting is a strategic process, and part of the overall strategic direction which will be guided by your board. You need to gather executive input by scheduling a meeting with your company’s C-level executives. You want to make sure everyone in your management team is aligned with the direction from the board.

Following are a few questions to help you get everyone thinking about goals: 

  • Where does our company currently stand in terms of customers, sales, revenue, and profit?
  • Where do we want our company to be in the next five years for customers, sales revenue, and profit?
  • What’s our five-year quarter-on-quarter growth rate?
  • What is our mission?
  • What is our vision?
  • What type of changes would we like to see within the company in the next year? In the next five years?

Goal setting varies for different companies and industries so make sure you develop a list of relevant questions you’d like to ask during the meeting.  

Determine your short-term and long-term goals

Short-term goals are what you’d like to conquer within a six-month or one-year time period. Your long-term goals should have a rough timeline of about 3-5 years.

We are assuming you already have your mission and vision statements in place. The reason you should have your mission and vision in place while setting goals is so the goals you set align with your business’s mission and vision statement. Most importantly, they should align with your big WHY.

Your long-term goals will help guide how you define your short-term efforts. For example, if you want to generate $1,000,000 annual revenue, then you need to make sure that your short-term goals strategically help you conquer your long-term goal. In this case, your one-year goal can be to generate $200,000.   

Some long-term business goals examples include:

  • Increase the total income of the company by 20% over the next five years.
  • Increase brand awareness.
  • Reduce production expenses. 

Not all goals should be revenue-based. The core areas you should focus on include:

  • Revenue and supporting goals
  • Customer service goals
  • Employee appreciation goals
  • Community outreach goals
  • Marketing goals

Once you have your mission and vision statements, your big WHY, and input from C-level executives, you can begin to determine your long-term goals. Once you do that, start breaking each of them into short-term goals, making sure they help you strategically achieve your long-term goals.

Ensure SMART goals

While developing your goals from the idea to the action stage, the one thing you should keep in mind is to create SMART goals. SMART is an acronym relating to each element of a goal: 

  • Specific – One activity, thought, or idea
  • Measurable – Something you can track, measure, and report
  • Actionable – Clear tasks or actions to progress your goal
  • Realistic – Possible to achieve
  • Timely – Results should occur within a specific time period.

 Setting SMART goals will help you:

  • Provide explicit direction
  • Help create tasks and actions 
  • Motivate everyone within your company
  • Help evaluate your progress 
  • Align your team to work on your priorities 

Set your goals the right way

Following these steps is how you can set the right company goals. It’s important to note that goal setting isn’t a one-time thing. You need to update your short-term goals consistently. Set your own KPIs to measure whether you’re on the right track or not. This will help you stay organized and focused.

With careful planning and consideration, your SMART goals will steer your business in the right direction and align everyone involved and give them a sense of purpose and value.

If you haven’t set your goals already or aren’t sure where to start, , we’d love nothing more than to help you out.

Book a demo today.