While setting goals can take on many forms and can use various processes, the bottom line is that goals are what keep businesses moving forward, large and small. They also help employees, managers, and all other stakeholders in a business to be accountable for results and learn from them. If you manage a small business and want to see improvements in the coming months and years, read on to learn about establishing SMART goals in different areas of your company.
WHAT ARE SMART GOALS?
In order to efficiently set goals that are realistic and verifiable, businesses will commonly use the SMART goal technique. SMART is an acronym that was originally used by corporate consultant George T. Doran in a 1981 Management Review article. Since the publishing of this article, companies and individuals all over the world have taken this idea and run with it, sometimes altering it slightly to meet individual needs.
So, what does the acronym SMART stand for anyway? Each letter represents a principle to be applied when creating your goals.
The “S” is for “specific”. Your goal should be clearly defined rather than vague. It’s helpful to use action words in order to achieve this. For example, instead of saying your goal is to get more clients (vague), you could say you want to generate X number of new leads in X number of months by expanding your social media presence (specific).
The “M” stands for “measurable”. Targets need to be identified in order to track your progress. Ideally, these targets will be quantifiable so you can easily figure out how you are doing on your goal. However, Doran mentions in his original article that high-level, more abstract objectives can be necessary for top-level management. Figuring out the measurable actions leading to achieving these objectives, whether quantifiable or not, is the real key. Using other tools that record measurements are required. The more automated the measurement process can be, the better in regards to efficiency. Tracking progress toward goals can be done on a simple Excel spreadsheet or using goal management/project management software.
The “A” represents “attainable”. Some versions of the acronym use the synonym “achievable” instead. Small business owners often get into trouble by looking beyond the mark and setting lofty goals from the outset rather than setting and meeting manageable, realistic goals and raising the bar from there.
The “R” in SMART stands for “relevant”. The goal should make sense for the company in terms of industry context, overall strategy, and other areas of interest. If these goals are at a department level, then they should also make sense within your given job function.
The “T” stands for “time-bound” or “time-based”. This means you will want to set a timeframe for achieving the goal. Setting a timeframe helps you to be accountable to the goal. Just saying “we want to build our client base” does not provide parameters for the goal and you could find yourself a year from now with the same number of clients repeating the same un-SMART goal.
SETTING SMART GOALS FOR FINANCES
PERSONAL
As a small business owner, your personal finances are usually as rigorously evaluated as your business is, especially when applying for loans and other financing. SMART goals can help you with your own personal financial health which will in turn benefit your business.
Building credit in your business and as an individual requires taking on a degree of debt. As a calculated risk that is handled responsibly, this can boost your credit score and be very rewarding in both cases. If you are a small business owner, lenders will largely determine your trustworthiness by your credit score. If you want to build your credit score, you can use SMART goals to get where you want to be. Instead of setting the goal to “improve my credit score” you could use the SMART principles and make the goal to “improve my credit score by 30 points this year by paying off a large debt and never being late on monthly dues.” Then you can establish KPIs, perhaps even with the help of a financial advisor or accountant, to track your progress to this specific, measurable, attainable, relevant, and time-bound goal. Additionally, consider using this method for setting goals for retirement and creating a personal emergency fund.
BUSINESS
If 2020 has taught us anything, it is this: your business should also have an emergency fund. An emergency fund should be able to cover three to six months of all expenses if the need ever arises to use it. Saving to this degree can very difficult for small businesses, especially those with razor-thin margins as is. It can be regrettably easy to push off until an emergency/disaster arrives at your doorstep and you are unprepared. Setting SMART financial goals for building your emergency fund can help hold you accountable to actually following through and prioritizing it.
Prioritizing an emergency fund is made easier by having a solid budget. Some companies will make an initial budget and then fail to review it or adjust it for years at a time. Setting SMART budget goals can ensure that your budget is sound, current, and goal-oriented which can in turn help you to identify where costs can be cut and the extra money can go to building that emergency fund, paying down debts, or other essential financial activities.
SETTING SMART GOALS FOR MARKETING
One mistake that businesses make when developing or expanding their marketing strategy is to think only in terms of the tools they want to use. Do they want to boost ads on Facebook, should they start writing content and, if so, which keywords for search engine optimization (SEO) should they use? While these are eventually important questions to ask if your activities are not tied to higher goals and key performance indicators (KPIs), your activities—and the funding behind them—will simply not be as effective.
One article suggests that, when setting SMART goals for marketing, you make goals for your company’s brand as well as revenue goals. Lead generation, website traffic, and client growth are necessary for business success. However, having brand goals, though more difficult to measure, will contribute to your revenue goals by establishing image consistency, getting clear on priorities, and leaving a stronger impression on those who come in contact with your brand. The marketing activities you engage in whether it’s beefing up your social media content or doing community outreach should derive from these goals. Setting KPIs, or fulfilling the “measurable” aspect of SMART, in revenue generation is straight-forward. Doing it for brand development can be more subjective, though not impossible. It just takes a little more creativity.
Fulfilling the “time-bound” requirement for a SMART goal is also very important in marketing since there could be a couple of months of research necessary before even deploying your strategy. You will also most likely want to set short-term and long-term marketing goals. Short-term goals may be evaluated at the end of a weekend campaign while long-term goals may be evaluated quarterly or annually.
DEVELOPING SMART SALES GOALS
The way sales are generated differs dramatically for small businesses in every sector. For many, sales happen through foot traffic and small day-to-day transactions. For other types of small businesses like trucking or construction, sales are generated through contracts with other businesses. Whether you are wanting to get more people through your door or land more contracts, you will want to set SMART goals for your revenue generation. This often goes hand-in-hand with marketing in that marketing activities are meant to generate sales and increase revenue. Financial decisions and goals will likewise also be attached to the larger revenue goals of the business.
Sales goals will probably be the most strategy-based of them all. They encompass growth, diversification, efficiency, and other major strategic areas. After all, the purpose of your business is to sell a product or service that meets a need and generates income for your company so you can keep doing it. Short-term sales or revenue goals that are SMART may include the number of leads you want to generate or contracts you want to engage in a given year. Each letter in the acronym gives you the opportunity to think of how you will get there. A longer-term SMART goal may include a three-year market expansion plan. The details for achieving longer-term, higher-level goals like this should be reflected in your business plan.
SETTING GOALS IN UNCERTAIN TIMES
The reality of small businesses has changed dramatically during the pandemic. Many goals have had to be put on hold while leaders focus on survival. Nevertheless, “necessity is the mother of invention” as the old proverb goes and there has been evidence of this across the country as innovative thinking breeds new goals and objectives related to communications, operations, and supply chain. The need for adaptability does not minimize the effectiveness of SMART goals which can help businesses in uncertain times to be efficient, proactive, and focused even as your company faces potentially unprecedented changes.
