SMART goals are not just for personal development; they also apply to businesses. Without goals, a business is simply feeling its way around and hoping it will succeed; a terrible way to grow any company. SMART goals provide the boundaries necessary to tell a business what it can and cannot do. The acronym SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Every goal your business sets out to accomplish should be measured against these four measurements. Let’s briefly look at each goal to gain a deeper understanding of how to apply them to a business.
Specific:
The goals a business manager or owner has in mind need to be precise and clear. For example, instead of saying, “We want to see an increase in income next quarter,” a specific goal would be, “We want to see a 16% increase in income next quarter compared to this quarter.” When the goal is clearly stated, those who drive income are able to calculate and determine how much sales they need to bring in, or how many more products they need to sell to reach the calculated income number. Or how many clients they need to serve to get to the desired income total. The clearer one can communicate, the higher the chance of achieving the set goal.
Measurable:
The second goal characteristic is measurability. The goal a business sets out to meet should be defined in units, whether those units are the number of widgets, a percentage of sales, or the number of repeat clients. Back to our example above, where we stated we wanted income to grow by 16%. Just like the Specific goal characteristic, the measurability goal helps provide a business team with clear, precise guidance, eliminating confusion and giving them a known target to work towards.
Achievable:
Thirdly, a business’s goals need to be doable, or attainable. There is no problem with a goal being challenging; in fact, a challenging goal is beneficial as it allows the team to utilize their skills and experience to make it work. When it does, they have a sense of pride in accomplishing the goal. While challenging a team is excellent, setting a goal that is impossible to reach can deflate those working towards it and make the business appear to have failed, when in reality, what it was aiming for was never attainable. For example, if a company sells 200 lawn chairs a month during the Summer months, then the owner sets a goal of 400 lawn chairs to sell per month for October – December; the goal is not attainable. For one, the peak season for lawn chair sales is during the Summer months, not the Fall months. Second, a new goal of doubling sales seems unrealistic. As you set your goals, make sure that they are achievable. Look at your historical sales (or expenses) trend for the product line, pay attention to what’s happening in the market, and look at what your competitors are doing. Always review your goals regularly to ensure they are attainable for your target market.
Relevant:
The fourth goal characteristic to ask yourself is, do my goals align with what my business has strategically set out to do? If the business’s goal is to provide the highest quality pens on the market, then you should not attempt to reach that goal by engaging in a price war with your competitors. Higher quality almost always translates to higher prices. Define your goal, determine how to achieve it, and make changes to your product or business strategies only if they are relevant to your established goal.
Time-bound:
A goal needs to have a time limit attached to it. Returning to our example, we noted that we aim to increase income by 16% in the next quarter. We did not say that we would simply increase income by 16%. We identified the time limit of a quarter, or three months. When time limits or bounds are not set, it is easy not to achieve a goal and cause confusion within a team. The time-bound goal should be achievable for those involved to reach. Increasing sales by 40% in a week may not be a realistic time-bound goal to set.
The SMART goals should be reviewed regularly to ensure they align with your business’s needs and are helping the company achieve its vision and grow. With SMART goals, your business has a good chance of optimizing operations and meeting, or surpassing, its budget. Apply SMART goals today and watch your business take off.
DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.
