We should also add to each disclaimer that includes the link for these partners. Here's an example with Lili: This article is posted with permission from our partner Lili and originally appeared on the Lili blog at: https://lili.co/blog/business-goals
Get the digital bank account designed for freelancers with Lili and manage your business expenses, estimate your taxes, and save for a rainy day all with zero account fees. Start a Lili account today.
Do you have a business plan ready to go but are unsure where to begin and how to get your team on the same page? Or have you already begun executing on your business plan but feel like you’re flailing and lack focus?
Think of your business plan as your dream vacation. You wouldn’t book your dream vacation without an itinerary, right? Defining and setting business goals is the itinerary to your business plan.
Setting these overall company goals is the key to successfully ensuring you achieve the business objectives you’ve laid out in your business plan.
What is a business goal?
A business goal or company goal takes the business objectives outlined in your business plan and breaks them down into clear and focused segments that respect your two most valuable resources: time and money.
Every business plan is unique in that certain pieces will take longer to complete than others. To accommodate for this, there are two types of business goals: short-term goals and long-term goals.
Short-term business goals
Short-term goals are typically achieved in the near future, within 3 to 6 months, but not more than one year.
Examples of short-term business goals are:
- Hire more people
- Find the right software for project management, tax management, invoicing, etc.
- Fix client onboarding
Short-term goals are important and useful because they help with making important company decisions, can be used for performance reviews, and support long-term business goals.
Long-term business goals
Long-term goals are high level strategic goals that are typically achieved in 1 to 3 years.
Examples of long-term business goals are:
- Significant increase in revenue
- Acquire a competitor
- Expand into a new market
Long-term goals are what you and your team are aiming for when thinking about the future of your business or start up. Some businesses go as far as putting pen to paper while asking the lofty question, “what do we want our business to look like in 10 years and how will we get there?”
What is the difference between short-term and long-term business goals?
The difference between short- term and long-term business goals is bigger than you might think. As business owners and entrepreneurs we need to train ourselves to keep one eye in the present and one eye on the future. This is a challenge. Setting both short and long-term business goals allows us to do in the present while keeping an eye on the future.
Imagine a tree. Your business plan is the foundation or the roots of the tree. The long-term goals are the trunk. They hold up the short-term goals which are the branches and leaves. Like leaves and branches, the short-term goals change and grow a lot faster than the trunk does. But they all work together in an ecosystem, similar to your business.
Does my business need both short-term and long-term business goals?
In order for your business to grow and achieve what you’ve laid out in your business plan, your business absolutely needs both short-term and long-term goals. Everyone who operates within your business needs to know and understand what they need to focus on now, which are the short-term goals and where the company is going, which are the long-term goals. A tree wouldn’t be a tree without a trunk or branches and leaves. It needs both.
How do you set business goals?
Setting both short-term business goals, and long-term business goals, takes time. Plan to spend a few hours on this project. Remember, time is one of your most valuable resources. Be sure to use your calendar to find a time that makes sense for your business. You likely won’t have time for goal setting when a big launch is about to happen. Where appropriate, invite key stakeholders (investors, leadership, team members) to be a part of this undertaking. Inviting these stakeholders gives you opportunities to increase buy-in and understand where there is excitement and/or concerns about objectives laid out in your business plan.
One great approach for setting business goals is to use the “FAST” goal setting technique created by MIT’s Sloan School of management for setting both long-term goals and short-term goals.
Here’s a brief breakdown of FAST goals that you can easily apply to your own goal setting:
Frequently Discussed. Discussion of goals gives leadership and management insights to team member performance and progress. Discussing your business goals also provides a decision making foundation. If you set them and fail to revisit them, time and money will be wasted and morale will plummet.
Ambitious. Short-term and long-term business goals should be achievable and should also push your team. Remember to celebrate the wins and understand the losses. No doubt, you’ll have several in both categories. With clear goals you’ll be able to know why a win was a win and a loss was a loss. Leave nothing to chance.
Specific. Each goal should be tied to a metric with a set due date so that progress is easily measured and everyone knows how long they have to work on the goal. When the metric and timeline are clear, course correcting is simple. If there is no time set from the start, teams will have a hard time prioritizing their day-to-day work.
Transparent. Short-term goals and long-term goals should be visible to everyone in the company. You can keep it simple in an excel spreadsheet or use a product where you can customize a dashboard. This shows that every team member is an integral part of the success of your company.
Examples of how to set short-term business goals
Using the examples of short-term goals from earlier, it’s time to make them more specific and measurable.
Hire 3 people becomes:
- Hire three sales reps
- By: specify a date that is 3-4 months away
- Responsible person and team: Head of Sales + Human Resources
Find the right software for project management, tax management, invoicing etc. becomes:
- Source and implement an invoicing software solution that fits our outlined budget
- By: specify a date that is 4-6 months away
- Responsible person and team: Operations and Billing departments
Fix client onboarding becomes:
- Design and launch a client onboarding process
- By: specify a date that is 2-4 months away
- Responsible person and team: Head of Marketing and social media managers
Examples of how to set long-term business goals
Using the examples of long-term goals from earlier, it’s time to make them more specific and measurable.
Significant increase in revenue becomes:
- $10 million in revenue
- By: specify a date that is 2-3 years away
- Responsible person and team: CEO, CRO and CTO
Acquire a competitor becomes:
- Acquire emerging competitor in our market
- By: specify a date that is 3-5 years away
- Responsible person and team: CEO and CFO
Expand into a new market becomes:
- Expand into European market
- By: specify a date that is 1- 3 years away
- Responsible person and team: COO, CMO, CTO
Three notes when goal setting:
1) When it comes to the “responsible person and team” be sure to assign a team member to take ownership of each goal. There will likely be multiple teams and people working on a short-term goal and/or long-term goal at any given time. Naming one specific person to each goal means that the entire company knows who to approach for questions or updates.
2) Once a person and team knows which goals they’re responsible for, these teams will need to create a plan for how they are going to complete the goal on time.
3) Remember: make sure that the process of achieving these goals is transparent. Short-term goals and long-term goals should be accessible via a simple spreadsheet or dashboard that anyone in the company can easily find.
Why is setting business goals important?
Remember your two most valuable resources, time and money? When goals are set and the team has bought into who is responsible for a particular goal(s), your budget is well spent as everyone knows what they need to be working on and when the work is due. Every team member has a purpose and is engaged in their work. Because your goals are derived directly from your business plan, team members know that if they don’t work toward the company goal that is assigned to them, then other company goals will likely fail.
Company morale will also be impacted. Knowing what you’re working toward will increase employee engagement for some and reveal less-engaged team members. It’ll be easy to decide if the team members with lower engagement should move to another team or project, or even move on from your company.
Avoid risk, start setting goals now
If you fail to set business goals, you risk losing time, money and seeing company morale suffer. So make sure you avoid this and start now! Set clear short-term and long-term goals using the FAST business goal setting method.
As you set your goals, remember why you set out to start your business in the first place. Setting short-term goals and long-term goals allows you to run and manage your business with clarity and consistency. One bonus result of having transparent short-term and long-term business goals? Your company will be a place where people like to work and want to work.