How to Set Small Business Goals
Kody Wirth | Oct 29, 2023
How happy are you with your business’s performance? Are you patting yourself on the back, having nailed every goal?
If the answer is no, you’re like many business owners who struggle to hit business targets. You know exactly what you want—a bigger business, larger per-customer sales, more leads, higher profits—but you struggle to meet your goals.
In this article, we’ll show you how to set clear and actionable business goals to help you reach your full potential as an entrepreneur.
How to set achievable business goals
There is always so much to do when you’re a business owner. You need to find new clients, keep your existing clients happy, manage your finances, streamline your processes, and motivate your employees—all at the same time. Here’s how you sort through all that clutter and set goals to move the needle.
1. Clarify the goals you’ll prioritize
To ensure you don’t waste time and money—you must know your top priorities when setting company goals for the year. These should be clear opportunities or issues that show the most significant potential to grow your business.
So, how do you identify them?
A SWOT analysis provides a simple but effective framework. You’ll look at your business and competitors to identify potential advantages and shortcomings that can set you apart.
If you’re an up-and-running business, you’ll find additional value by reviewing your financial statements and forecasts.
- Where did you over or underperform?
- Is your cash on hand what you expected?
- Are you overspending in any areas?
Answering questions like these will help you understand your current financial position. From there, you can dig deeper into specific departments, initiatives, line items, etc., and uncover what opportunities are worth tackling in the next year.
Example: You run a local salon, and during your review, there was an immediate red flag—revenue is down. Exploring a bit further, you found that the average order value of each customer had decreased and that the number of new customers was far lower than the previous year.
Considering those issues, you develop the following business goals:
- Introduce new product offerings and add-ons to increase revenue from existing clients.
- Increase client base by targeting local office workers.
Please note: These aren’t goals yet! They are your key areas to focus on. After you’ve discussed them with your team—which we’ll cover next—you’ll turn them into SMART goals (specific, measurable goals) to ensure that you’ll take action on them.
2. Review these goals with your team
Your team is out there every day, working on your products or talking to clients. They are the people who can tell you what’s working and what’s not, what’s holding your business back, and where you should be focusing your efforts and setting your business goals for the year ahead.
So, once you’ve selected what you think should be the top goals for your business, sit down with your employees, and get their feedback. They may agree or have valuable insights that you haven’t considered.
By involving your employees in the goal-setting process, you make them feel valued and engaged while at the same time ensuring your goals are realistic and achievable.
How to set team goals that actually work
Part of getting your team involved in the goal-setting process is breaking down company objectives into team goals. Here are some tips to make these individual goals just as effective.
3. Make your goals SMART
You have two to three business goals. Now, it’s time to make them actionable. While you can use several different goal-setting frameworks to do this, we recommend SMART goals:
- Specific: What exactly are you going to do?
- Measurable: How will you know if you are succeeding?
- Achievable: How will you implement the goal?
- Relevant: Does the goal connect to your overall objectives?
- Timely: When will you achieve the goal by?
Let’s take one of our business goals and turn it into a SMART goal.
Original idea: Increase client base by targeting local office workers.
- Specific: Gain 20 new customers from the surrounding office buildings.
- Measurable: Measure progress by tracking the number of new customers won and profits made while maintaining our existing customer base.
- Achievable: We will create a customized sales promotion, which we will publicize via leaflets and flyers in the office building.
- Relevant: This will help us increase the number of new customers, thus growing the salon business and profits.
- Timely: We will achieve this by the end of Q2 2024.
How to set SMART business goals
Walk through a more detailed example of the SMART goal framework and learn how to use it with your own business goals.
4. Set key performance indicators (KPIs)
The SMART goal format should give you an idea of your timeline and what it will take to achieve your goal. However, you need to establish how you’ll measure your progress. One of the most common ways to do this is by adopting Key Performance Indicators (KPIs).
These numerical values, like the number of new clients from a specific campaign or monthly sales targets, indicate whether the goal is within reach. While creating SMART goals, you’ll define relevant KPIs, ensuring they align with company and individual objectives.
For example, a salon might have overall KPIs related to customer acquisition from a campaign, while a stylist might focus on customer satisfaction and spending KPIs.
12 tips to help you choose effective KPIs
Learn how to choose the right metrics to measure your progress with these tips from experienced entrepreneurs
5. Set a structure to review and revise
If you want to make something happen, you need to create a schedule and build good habits around it.
If you want to get healthier, you need to add exercise to your schedule, plan time to cook healthy meals, and so on. You should treat your business goals the same way. You need to schedule the actions you’ll take to reach your KPIs.
It’s a great idea to put regular (possibly monthly) business plan review meetings on your company calendar now This will help you set, revisit and revise specific short-and-long-term business goals and objectives.
To make these meetings less overwhelming, try and automate as much as possible. Use a calendar for both you and your staff, and add reminders and online task management software to organize tasks, set deadlines, and prompt you for repeat actions.
How to develop an action plan
Learn how to adapt every step in the goal-setting process into an actionable plan that keeps you and your team members on task.
The importance of setting business goals
Why are goals important? Here are a few reasons:
Goals provide clarity
There are plenty of things that you want to accomplish as a business owner. But what tasks are most important? How do you know if you’re making progress?
Setting well-structured goals will help you prioritize work, establish a direction, and provide a framework to measure success. No more random assignments or distractions—just a clear idea of what you want to achieve and how you’ll get there.
Goals motivate and align your team
Aimlessly taking on work does not lead to success. Without a set goal, there’s no shining beacon ahead that you’re trying to reach. And no milestones on the way there to celebrate and keep you going.
Having company and team goals provides greater motivation. It also makes it far easier to set individual goals that connect each employee’s work to that larger objective.
Goals provide a structure to measure success
Setting goals requires you to consider what metrics you’ll use to measure success. Doing this upfront makes tracking your progress much more manageable and lets you know if you’re still on track.
Skipping the goal-setting process means your ideas of success will remain vague and aimless. You’ll be more likely to run down unproductive rabbit holes and may never actually realize your aspirations.
Goals help your business grow
Much like writing a business plan increases your chances of successfully launching a business—setting goals increases your chances of achieving regular business growth. You’ll have well-structured ideas of where you want to go, how to get there, and if you’re progressing.
And by continuing to set, review, and revise your goals—you’ll speed up the process and avoid costly mistakes.
Types of business goals
The goal-setting process in this article focused primarily on long-term business performance goals—the kind you’ll set once a year. These broader goals may focus on any of the following:
Whether it’s achieving a specific net profit margin or finding ways to cut back on certain expenses—these goals focus on growing or maintaining financial health.
These goals are all about better serving your target customer. This may include improving customer service, increasing repeat purchases, or expanding your clientele.
Sometimes, you’ll find savings by optimizing current workflows. This could mean reducing product production times, eliminating error rates, or streamlining your supply chain.
Marketing and sales goals
Marketing and sales goals can be broad, like boosting brand awareness, or very specific, like improving specific channel sales or launching a new marketing campaign.
Employee and team goals
These are goals focused on reducing employee turnover, boosting team spirit, or furthering education to keep everyone at the top of their game.
Sustainability and social responsibility goals
These are goals that may not directly impact your bottom line. Instead, they focus on accomplishing an altruistic mission such as shrinking your carbon footprint or giving back to the community.
Innovation and development goals
Far more opportunistic and research-based goals that could include launching a new product, embracing the latest tech, or venturing into new markets.
Compliance and risk management goals
Goals to ensure your operations meet all legal requirements and have strategies in place to dodge financial and operational pitfalls.
Choosing the right goals is a process
Selecting goals and creating a plan to reach them takes time. Even by following the steps in this article, there’s no guarantee that you’ll select the best opportunity and be able to efficiently pursue it.
That’s why the review process is so crucial. Rather than pursuing a goal that won’t make an impact, you can quickly pivot if you realize something isn’t working.
Goal setting is just the start, and plenty of other ways to better manage and grow your business.