Are you setting New Year’s resolutions? No, we’re not talking about hitting the gym or eating out less. We mean setting business goals and objectives. Coming into the new year, it’s the perfect time to set some goals – both realistic and aspirational – for your business to work towards.
Why set business goals?
In short, business goals ensure that everyone in your company knows what you’re working towards. It helps you to set out a plan for how you’re going to get there, giving your business a direction.
Once you’ve decided on your goals, you can then determine whether you’re achieving success or not – whatever that means for your business. Think about your North Star metric: it’s something your whole company can get behind and work towards. Uniting your workforce with common goals will be an important part of your success criteria, and these goals provide an anchor for each department to feed down into monthly, quarterly and biannual reviews.
Using your overall business goals as a starting point to cascade down into departmental and employee objectives ensures that everyone’s individual goals are tied to the overall business objectives and no one’s doing anything ‘just because’.
Goals not only keep your teams on track but also keep them working in sync, by aligning them towards a common purpose. On the face of it, a data science team might not seem to have much in common with your customer service team, with each working on projects that they perceive to be important to the business. But if you set a common goal – say, to increase customer retention by 10% – then your data science team knows that they should be focused on identifying triggers for churn, whilst the customer service team should prioritise resolving the issues raised by existing customers over attracting new ones.
Finally, business goals can help guide your decision-making. For that customer retention goal, you might want to focus on developing a self-serve knowledge platform for customers to solve their own issues, or invest in a loyalty programme to turn one-time customers into returning ones.
What are the different types of business goals?
Generally, you’ll want to separate your goals into two different types: short term and long term.
Short-term goals for a business
Short-term goals are things that you want to achieve in the near future, typically for the next quarter or year. Although looking at the big picture is important, short term goals are crucial too as, otherwise, it can become a little overwhelming for both you as a business owner and your employees if you’re all working towards one overarching goal without seeing much day-to-day progress. Shorter-term objectives can keep the momentum going and lift spirits as you tick them off one by one.
For this reason, you might want to make these SMART goals – that is smart, measurable, achievable, realistic and time-bound. Data shows that only 19% of people achieve their new year’s resolutions – and it’s no different for businesses.
There’s no point in setting a lofty goal of acquiring 5000 new customers by the end of March 2024 if you currently only have 3 customers. It’s better to break your big goal down into smaller chunks that can be achieved in a shorter time frame whilst keeping the momentum going.
Long-term business goals
Long-term goals are more ‘big picture’ than short-term goals. They’re typically things you want to achieve in the future, whether that’s in two, five or even ten years. You may need to clear a few short-term goals before you can achieve your long-term goal. Say you want to expand into a new market, for example. That’s your long-term goal. But to achieve that, you first have to research different markets, conduct customer analysis in your chosen location, and assess market entry options.
So, you can think of your long-term goal as the ultimate aim of what you want to achieve for your business, and short-term goals as the waymarkers along the road that will help you to get there.
Read more: https://floatapp.com/blog/short-term-vs-long-term-cash-forecasting/
What goals should you set?
Your goals will be very much determined by who you are as a company, what you do, and what you want to achieve. You might want to start with the big picture: what is your long-term dream for the business? Do you want to expand into specific markets? Become the number one product in your vertical? Increase retention by 30%? Develop and produce three new products?
When you start with the big picture and decide what it is you want to be known for as a business, it’s easier to break down how you’re going to achieve that, giving you strategic business goals to focus on.
Need some inspiration? Here are some business goal examples to help you get started.
Financial goals for a business
Many businesses, understandably, focus their goals around revenue – after all, money is the driving force of any business.
If you’re a start-up, you’ll know how expensive it can be to get a business off the ground. So a good starting point might be to set a goal to break even. Just make sure that you attach a timeframe to it, whether you aim to break even within three months, six months, a year or longer. Keep on top of the money going in and out of your business with cash flow forecasting and you’ll be well on your way to ticking this one off.
Alternatively, you could set a goal to pay off your business debts – again, put a realistic timeframe against it, and put together a plan of how you’re going to pay off your debts and in what order.
You could also set a goal to secure your first round of funding. Perhaps you want to achieve this within 18 months of setting up as a company, in which case you’ll be better equipped to write short-term goals as to how you’re going to achieve it.
Start-up business goals
There’s lots of potential for new businesses, and it can be tempting to try to achieve everything all at once. Setting goals will help you to scale back and focus only on what is most important for your company.
Maybe you’re set on expanding your business, and to do this you know you need to hire ten more staff. How will you achieve that, what areas are most important for you to expand in, and how will you ensure you secure the best hires?
Your goals might also be focused on establishing processes to make your business more efficient or get more eyes on your products. Maybe you want to establish a customer service process by the end of your third month in business, or you want to increase engagement on your social media channels by 10%.
How to achieve your business goals
Remember, it’s easier to define your goals when you first start with the big picture and then break it down into smaller, short-term goals. Starting with small goals is more achievable than setting out to smash your big-picture goal within a matter of months. Using a framework like SMART goals or Objectives and Key Results (OKRs) can make it easier for everyone in the business to understand what your goals are when they need to be achieved, and exactly how to get there.
Using data is also essential, both for setting your goals and for measuring them as time goes on. When you have plenty of data – from marketing and analytics to financial information – it’s easier to identify what areas you need to focus on. Does the data say that you currently have a cash runway of just a couple of months? Perhaps you should set a goal of increasing your cash runway to six months, within six months.
Using software is a great way to plan for your business goals – in fact, 38% of respondents to a recent survey stated that software as a service (SaaS) was very important to helping them achieve their goals as a business, and 35% stated it was ‘quite important’.
Float’s scenario planning feature can help you to understand what your business might face, given certain circumstances, in the future, allowing you to course-correct before you hit a cash crisis. From onboarding new staff to getting new investments, plot them into the scenario planning tool and see the real business impact of your goals and objectives.
Try out Float for free today and kick-start your business goal-setting.