Setting business goals can increase your productivity as a business owner or an employee. Business goals help your company focus on the essentials and the target for the next period – whether that's a month, a financial quarter or a year.
This article defines business goals and provides valuable tips for setting up both short-term and long-term business goals.
What are business goals?
Business goals are a company's aspirations within a fixed timeline. Some examples of business goals are:
- Long-term goals for the entire business: for example, 'increase turnover by 50% in the next two years'
- Weeks-long goals for one particular sector of the business: for example, 'human resources need to aim for 90% employee satisfaction over the next month'
- Quarterly goals for one particular employee: for example, a salesperson may be tasked with returning a 20% increase in sales by the end of the next quarter
There are many reasons to set business goals. You can set them to motivate your employees, measure company progress or accelerate growth. Furthermore, clearly defined business goals indicate employees' expected contributions going forward and ensure the business is heading in the right direction.
What are business objectives?
Business objectives are discrete actions an employee or a department takes to realise the set business goals. You need to set objectives within goals and treat them like small milestones that help you reach overarching goals. Consequently, if you are setting business goals, you also need to set business objectives to ensure that you meet the goals. Additionally, objectives are specific and often time-bound or run by a strict timetable.
Business goals vs. business objectives
There are some differences between business goals and business objectives. The most important distinctions are the following:
- Business goals focus on what the business wants to achieve, whereas business objectives focus on achieving them.
- Business goals are broad and general, while business objectives are narrow and specific – i.e., goals specify a particular vision or direction, whereas objectives pinpoint specific steps.
- Business goals can be difficult to measure due to their vagueness. However, objectives are easy to measure, and you can use them to evaluate the goals.
- Goals focus on the results, while objectives are about the process.
Here are some examples of business goals:
- Become the top-ranked restaurant on Trip Advisor.
- Increase our turnover by 20% next year.
- Set up our own IT consultancy firm.
These are examples of objectives for achieving each goal:
- Ask all your customers to rate your restaurant on Trip Advisor when provided with the bill.
- Hire two new staff members to take on more work.
- Work in an IT consultancy job for two more years, and save the money needed to start a business.
Short-term versus long-term business goals
The definition of short-term and long-term business goals is fluid; each workplace defines them differently. Broadly speaking, short-term business goals are the goals that you would like to achieve in less than one year, and long-term business goals are any goals that require a year or more to accomplish.
How to set long-term business goals
It's a good idea to set long-term business goals first. Then, you can break these down into short-term goals.
Write out a ten-year plan
First, think about where you want your company to be in 10 years. Since dreams are usually broad, you can visualise your company in many different directions. Then, extract long-term goals from your 10-year plan. Some goals you may have written down could include:
- Become the most popular burger restaurant in Adelaide.
- Open up a second estate agent office in Western Australia.
- Secure enough customers each season to have a team of 10 tour guides working across the Northern Territory.
Although these are all ambitious goals, you can realise them with the right resources and commitment. Compact goals are generally better than vague goals like ‘we want to be the richest company in Australia'. These structure goals allow you to isolate and focus on the appropriate short-term goals and objectives for executing this decade-long plan.
Order your goals in order of importance
After completing the 10-year-plan exercise, you probably have a few long-term goals in mind. You can focus on a few of these at once, but it's more efficient to prioritise the most important one. Here is a look at the sequential arrangement of goals, using the Northern Territory tour guide company as an example.
Besides the goal set in the previous example, 'Secure enough customers each season to have a team of ten tour guides working across the Northern Territory, you may have to add other goals to get there, including the following:
- Expand tour packages into the Kimberley region of North-West Australia.
- Work closely with Aboriginal communities in the Northern Territory to provide sustainable tourism that supports their communities.
- Open up a physical shop in Darwin where people can make tour bookings.
In total, there are four goals here – and you can think of a bunch more. However, some goals may appear less significant than others but are equally as necessary. For example, you may decide to offer sustainable tours in the Northern Territory for now and then expand into Western Australia once you are on track to meeting your other business goals.
Write down short-term objectives
Once you have decided on your long-term goals, unpack each by writing down short-term objectives.
For example, the 'Secure enough customers each season to have a team of ten tour guides working across the Northern Territory' would have step-by-step objectives such as:
- Work on marketing angles, and sell more tours.
- Check tour prices against the competitors'.
- Ensure that tour guides are trained to provide great tours.
- Ask for reviews on websites like Trip Advisor, Google and Facebook.
Complete this for every long-term goal that you are prioritising.
Work out how you will track the goals
Next, work out a method of tracking your long-term goal. If you want to increase your turnover to a certain amount so you can hire more staff members, decide what amount you need for this. Then, specify the deadline for achieving this goal.
If your target turnover is $300,000 and your current turnover is $200,000, you need to increase your turnover by $100,000. If you set yourself three years to achieve this goal, you know you are on target if your turnover is over $33,000 in the first year.
That said, keep in mind that turnovers can change exponentially. So, even with temporary setbacks in turnovers, you are still on track to meet your long-term goal.
How to set short-term business goals
The first thing to do when setting short-term business goals is to decide the span to measure them. As mentioned above, most businesses define short-term goals as those achievable under a year. However, some businesses in a fast-paced sector classify any goal that takes more than six months to achieve as a long-term business goal.
Consider your long-term business goals
Often, short-term business goals are related to longer-term business goals. For instance, to realise the long-term goal in the previous example 'Become the most popular burger restaurant in Adelaide', you may set some short-term goals such as:
- Increase sales over this summer.
- Seek feedback from at least 50% of customers, then act on that feedback.
- Decorate the restaurant to give it a unique atmosphere and character.
Break each short term goal into objectives
Once you have a list of short-term goals, you need to work out how to reach each goal. For example, the goal 'Increase sales over this summer' could be broken up into the following objectives:
- Evaluate what the failures and successes were last summer season. Try to replicate the successes and learn from the failures.
- Employ a social media manager to improve social media marketing for the restaurant.
- Offer promotional deals to attract more customers on quiet nights and at lunchtimes.
Do the work needed to achieve each objective
Now that you have set your short-term objectives, it's time to get to work. Delegate each objective to a staff member, such as charging your new social media manager to look at social media marketing or evaluating your failures and successes with your business partner. Make a note when you achieve each objective, and then decide if you need to add more objectives to meet your short-term goal.
Setting goals and objectives is an exciting part of any business. Goals help you envision where you want to be, and objectives help you get there. If you run a business, you should regularly set short-term and long-term business goals and use them as a benchmark for success.