Imagine you’re planning your vacation this summer (yeah for you). Are you the type of person who gases up the car, pulls out of the driveway, then heads wherever the road takes you? Some people see this as an adventure but I suspect most people see this as a road to disaster; filled with potential pitfalls like running out of gas on a deserted back road, hotels with no vacancies, and ending up lost in an urban jungle. A more likely outcome is you spend your entire vacation hoping to find something interesting or fun. Well, that’s what businesses do when they don’t create SMART goals and concrete plans designed to help them reach their goals. Today, I hope to dissuade you of the notion that you don’t need SMART goals or any other planning to find business success.
Here are the key takeaways from this post:
- Understand the importance of setting realistic business goals
- Why SMART goals offer a better start to your business planning than less well-constructed goals
- Constructing SMART goals
- How to use SMART goals as the basis for business planning
The importance of setting realistic business goals
Just like you might squander money and precious time by not planning your vacation, you shouldn’t start a business without realistic goals.
Here’s how the government of Australia frames the importance of setting goals:
Goals are an important part of running a successful business. They can give you a clear focus, motivate employees, and set targets for your business to work towards. Goal setting can also provide you with a set of criteria to see if your business is succeeding.
With sound goals, businesses can make decisions when faced with opportunities and challenges. They can ask themselves whether the opportunity helps them reach their goals or doesn’t. This reduces the likelihood the firm will waste money on an idea. Goals also provide a measuring stick you can use to determine if you’re making progress or not.
We’ve all heard the stories of businesses started by founders who sketched out something on the back of a cocktail napkin while having drinks with friends. More often than not, these types of business plans fail miserably but we only hear about the select few that succeeded. And, often, there’s a lot more to the story than that; years of experience, prior failures (Henry Ford bankrupted multiple businesses before hitting on the one success), access to serious funding to cover mistakes, great advisors and mentors, and years of building the idea in their heads so it only took a few words on the napkin to capture the essence of all their thinking.
Why SMART goals help drive business success
So, what are SMART goals and how do they help drive business success, especially over just regular goals? Well, SMART is an acronym that stands for Specific, Measurable, Attainable, Relevant, and Time-bound. The image below is a great way to think about these goals and gives a short description of each letter in the acronym.
SMART goals are the key elements of your marketing strategy and form the basis for every tactic employed by the firm.
Here’s an example of a SMART goal:
In the next 4 months (timely), we plan to create a Facebook FanPage, corporate Twitter account, and post 3 times per week to our company blog (specific, attainable, relevant) adding 100 Fans, 250 Followers, and 10 subscribers to our RSS feed (measurable).
In addition to providing an endpoint that helps support business operations, success, and growth, goals act to coalesce your staff. Everyone knows where they’re going, what they should do, and how to prioritize their tasks so the company employees work toward something. They also understand their impact on the company and feel a part of the success. They know their efforts contributed and were valued. The outcome of this kind of “all for one and one for all” mentality is a stronger commitment to the firm, better job satisfaction, and more cooperation which result in lower turnover, less absenteeism, higher motivation, and better collaboration that all benefit the firm in its quest for success.
SMART goals should fit with the company mission.
A mission is tied directly to who you are as a company, your mission, and your values. For instance, my mission for Hausman and Associates is to blend marketing and social media while building insights based on analytics to provide superior returns for my clients. From this mission, I develop goals that fit. While I don’t want to share specific goals, let’s just say I have goals for building my reputation in the areas of marketing and social media (which brings in more clients), learning new skills related to marketing and social media (so I can provide better service to my clients), and building my own social networks (to demonstrate my ability).
I also have goals related to building my associate network, since I recognize this is an efficient and economical way to help my clients. By building a network of skilled practitioners from graphic arts, web design, SEO, and related fields, I’m able to put together dynamic teams with just the right skills to help clients. Through a network, I can find experts who are available right now, without having to pay a full-time staff and folks I’ve personally vetted so I don’t rely on gig workers like from Fiverr. It’s a somewhat unique business model and it works superbly to offer expertise at the lowest costs to clients. I invite you to join my network through my Social Media Marketing Tribe on Facebook.
Short-term goals should relate to long-term goals
After you’ve set up your long-term goals — where you see your company going in five or ten years — you need short-term goals that’ll get you there. You can’t run a business just looking at long-term goals, because they’re not specific enough to guide firm action. So, you need to break down your long-term goals into short-term tactics that guide daily action. So, if my long-term goal is to establish a reputation in marketing and social media, my short-term goals help build my reputation — things like maintaining this blog, answering questions on Quora, speaking at educational events, etc.
If your short-term goals don’t match your long-term goals, you’re just spinning your wheels. And, be careful about getting sidetracked by projects that don’t match your goals.
Don’t forget to include social goals in your planning process. Each year a higher percentage of global consumers use their spending to support companies that share their values, even sometimes spending more money to buy from brands that share their beliefs. This is especially pronounced among younger consumers. Below are some social goals to consider as you build your long-term goals.
Don’t be too rigid
OK, I just said to avoid projects that don’t fit your goals and now I’m going to take that back — a little.
Mindless adherence to your goals is also pretty silly. Passing up a golden opportunity because you never included it in your original goals is nonsensical. Just be careful that the new opportunity fits with your mission and that you create a SMART goal to encompass the new opportunity. Things change over time and you need to be prepared to make changes to your goals.
A great example of rigidity comes from Geshke, who founded Adobe. In the early days of desktop publishing, he and his partner developed the rudiments of a program that became Adobe Creative Suite. The original goal was to sell a package comprised of their software, a printer capable of delivering good quality output, and a computer to run the software (in those days, the software/hardware interface wasn’t as robust as it is today). Apple came to him wanting to make a deal but they didn’t want the computer since they made a perfectly good computer. A printer company was also interested but didn’t want the printer part of the bundle. Each time, Geshke sent them away because the offers didn’t meet his goals. Finally, a mentor pointed out that this new opportunity was worth considering and he amended his goals to allow for him to sell the software separately. And, we all know how that turned out.
You need to measure progress in reaching your goals.
Goals help you know what measures (metrics) to look at. If your goal is to increase sales, then measure sales over time to see if you’re reaching your goal. But, if your goal is to build a reputation, then using sales as a measure isn’t right. You should be looking at reputation metrics, such as upvotes on Quora, mentions, new subscribers, etc. because these metrics are surrogates for reputation.
Constructing SMART goals
So, how do you go about creating goals that are SMART?
Well, I can tell you how not to set goals. Just create them out of whole cloth.
Instead, a situation analysis should start the process of building good goals for your business. An environmental scan involves:
- determine how external factors, such as changing culture, economic conditions, the state of technology, political and legal trends, and (most importantly) your competition impact what you can realistically expect to achieve
- collect data so you can set measurable goals including data on:
- GDP and consumer confidence
- demographic trends from sources such as the US Census to determine how many and how much
- benchmarks from similar industries, such as the one below
- internal data on sales and expenses
Once you have concrete data (not assumptions, wishes, or hopes), you can set goals for your business that help it grow.
It’s important to set goals that encompass the entire business process. For instance, in marketing, we set goals throughout the buying process since you can’t reach sales goals (something we call terminal goals) without creating awareness and motivating consumers through the decision-making process to get to conversion. That process looks something like this:
Each element of this funnel requires specific actions. For instance, awareness (termed exposure in the graphic above) uses advertising, social media, SEO (search engine optimization that brings traffic to your website), video, affiliate marketing, and other tactics to help more consumers learn about your brands. Hence, you need goals associated with each element. You might set goals for the reach and frequency of exposure of your target market to your social media posts or the click-through rate for your Google Ads campaigns. These are relevant as these metrics correspond to your ultimate success. Vanity metrics, such as the number of followers, have no relevance in the grand scheme of things, although the growth of your follower count does have meaning.
And, that’s just marketing. You also need SMART goals for other aspects of your business such as production, finance, and HR.
Using goals for strategic planning
Classic business planning starts with the environmental scan. Based on this scan, as well as its mission, vision, and values, the firm sets goals that are relevant to the business’s success across all aspects of the company, as mentioned above. Next comes strategic planning with those goals in mind. Every action planned and every dollar spent should build toward reaching your SMART goals. Anything that doesn’t bring the firm closer to reaching one or more of its goals should be stripped from the business plan, starved for resources (if already underway), or abandoned. Ignore sunk cost arguments that might tempt you to continue contributing resources toward actions that don’t advance your SMART goals, despite the temptation offered.
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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.