The Importance Of Business Goals And Objectives
Getting a new business started and running successfully isn’t something that happens overnight. There’s registration to deal with, bills that need to be payed, employees to hire, marketing to set up.
We could go on and on, but you get the idea. Starting a business is hard work so it’s important to embrace anything that can make that work a little easier.
One easy way to make starting your business a bit less of a headache is laying out your business goals and objectives. In fact, we could argue that this is the very first thing you should do, before even registering your business.
Why? To know where your business is headed you need to set goals of where you want it to head, and how you’ll get there along the way.
Let’s take a look at the importance of setting business goals and objectives.
Business Goals and Objectives 101
Business goals and objectives come in all shapes and sizes. They’re subjective and no two companies will strive for the exact same thing. Sure, everyone wants growth, but that’s not much of an objective.
Every company wants to succeed. It’s the goals and objectives unique to your business that ensure you’re starting your business the right way.
We can split objectives and goals into two different categories, with one directly influencing the other. Let’s look at the difference between goals and objectives.
Goals are the smaller things that you’re planning on a day-to-day basis. They’re both large and small, but always short-term.
For instance, you could aim to finish a set amount of work by Friday. Or, you could make it your goal to register your new business by the end of the week. Both goals better your business and are easily attainable.
Objectives differ from goals in that they’re long-term, big picture things. Make $100,000 in profit next year is an example of an objective. We can say that goals make up objectives, even if not always directly.
For example, getting work done by Friday and registering your business both directly contribute to your objective of making $100,000 in profit next year.
So we’ve touched on the difference between goals and objectives and how they interact, but we need to talk about why you should care. Many reasons actually, and they go a bit further than just making life easier.
Hard data helps prove that setting goals and objectives have a measurable effect on exactly how well your business performs.
An astounding 9 out of 10 companies fail to execute strategy. The questions then is why, and the answer is lack of goals and objectives. Goals help the building blocks of your overall strategy, and that strategy leads to an objective.
Another number worth worrying about is that 85 percent of executive teams spend less than one hour per month discussing strategy. This figure directly contributes to the 9 of 10 companies that fail to execute strategy.
With so little time spent discussing strategy even the best-managed companies will have no idea what goals they’re striving for or how to achieve their long-term objectives.
For a startup, these stats have even further reaching implications. You don’t have the capital to fall back on should things go wrong. Failure to think about strategy leaves you with no route to your objectives, and failure to execute strategy often comes from having no goals or objectives, to begin with.
Beyond hard data, there are four main reasons to focus on business goals and objectives that bring out the best in any business.
Think of it this way. Hard data is great. It tells us that what we’re doing (or not doing) and how that affects your business. However, it doesn’t explain why setting goals and objectives is so useful on a human level.
The human intangibles keep people focused and on track for success. That includes yourself as the business owner. While data can prove that 9 out of 10 companies fail to execute strategy, it can’t explain why they failed.
That’s where the four reasons for the importance of business goals and objectives come into play. They show you the why and what business goals can do for your business.
Direction refers to where your company’s headed. As a startup, your company’s direction refers more to the future of the company, rather than where you’re headed in the coming weeks or months. Your business goals and objectives determine your overall direction.
Goals give yourself and any employees (if you’ve hired anyone yet) a sense of your organization’s direction and how you plan to get there. They help keep management (that’s you) on track when difficult decisions arise.
Think of small accomplishments. Each little goal helps drive your company forward. When you’re faced with a difficult choice you can make the decision that helps further your goals.
Likewise with objectives. They’ll give yourself and your employees something to strive for. Long-term decision making becomes easier when you have an objective in mind. Both you and potential employees can make decisions and take action based on what will help achieve your company’s objectives.
If direction is the final destination, planning is the way there. We talked hard numbers leading to strategic failure and planning is very similar. Strategy and planning are almost the same thing.
Planning determines our company’s eventual strategy. You plan the strategy to achieve your objectives. So like strategy, goals become very important.
Your company needs to set goals that help drive your strategy, but also help you plan. Your goals drive how you layout your company’s short-term and long-term plans.
Are you planning on quickly building supply chains? Maybe you will if your goal is starting production as soon as possible.
What about a plan to invest more capital into marketing? That could be influenced by how many social media follower’s you’re aiming to gather, for example.
Motivation refers to both keeping yourself and your employees motivated. It’s all too easy to lose motivation both if your business is seeing success or going through hardship.
Ask yourself this…what are you aiming for? What’s your the driving force keeping you engaged? Can you pinpoint one thing? No?
You’ve just learned another reason why goals and objectives are so important. Goals and objectives give you something to focus on. Something to aim for. Goals in the short-term and objectives in the long-term.
You might stay motivated to increase your social followers by 5 percent by the end of the month. Your goal gave you something to work towards.
Likewise, you might aim to have a profitable company in the next two years. That objective keeps you focused on the long-term.
Beyond just yourself, business goals and objectives also keep your employees engaged over hours, days, weeks, months, and years. They provide direction and promote action towards goal-related activities. Goals also energize employees, challenging them to achieve goals and show success.
Contrary to popular belief, while employees do want their space, they also want to know what they’re working towards. Your employees want direction.
They’re curious about what they need to accomplish, what they’re doing wrong, how well they need to do their job, and how to measure their success.
Goal and objectives give employees a definitive list of what they need to accomplish. Which in turn gives them a sense direction and lets the whole team know where management stands on the present and future of the company.
Beyond company-centric goals, you can also set employee goals and objectives to help your staff measure their own success and failure. Just don’t get caught up in setting quotas with implied consequences for falling short. Setting goals is positive, but consequence-driven quotas hurt productivity.
Business goals and objectives make excellent benchmarks to gauge your company’s success in an objective way. The more goals you meet, the more successful your company. The more objectives you accomplish, the better you’re doing at fully achieving your goals.
From a management perspective, this helps make decisions on the future of the company.
Despite all successes, sometimes you won’t achieve your goals. That’s fine and gives you an idea of what you can realistically achieve. You can then alter your expectations, goals, and strategy to reach those objectives.
Understanding what you’re capable of helps save money in the long-term that you’d otherwise waste on less than feasible endeavours. Business goals and objectives give you the ability to monitor yourself and how much progress you’re making. They provide an important check that keeps you from becoming blinded by your bias.
Goals and objective also help you evaluate your employees, as well as let employees evaluate themselves. They’ll tell you which departments are succeeding and which need help. What’s more, they can also let you know if you’re putting unrealistic expectations on employees.
On the employee side of things, employee-centric goals can help your staff understand if they’re making the correct choice, and also give a metric to evaluate their performance against.
Once employees know how they’re performing they can adjust their work to accomplish exactly what’s required or report back to management if things aren’t going as planned.
Though the freedom to make their own decisions helps motivate workers and also improves their work ethic. Attainable goals that show results improve employee morale.
Business Goals and Objectives: The Results
Now that we’ve covered why you should set business goals and objectives, it’s time to talk about the payoffs of your diligent planning. As we’ve briefly mentioned above, goals and objectives can lead to cost savings. Hitting realistic targets helps promote reasonable spending.
Though setting goals and objectives goes beyond just reasonable spending. Let’s take a look at the positive results achievable from setting business goals and objectives.
As we’ve discussed, goals build into objectives. The more goals you accomplish the more objectives you’ll achieve. This all snowballs into growth potential as you systematically achieve things that work in the interest of your company.
Plus, the more success you see the harder your employees will work.
Business success translates to employee happiness. Everyone wants to work for a successful company. And harder working employees means increased productivity and thus increased growth.
Increased Financial Returns
Like growth, increased financial returns in part come from employee happiness. Harder working employees create more value and eventually greater financial return. It’s more productivity per employee which means greater return on investment.
Business goals and objectives also help ensure your company is on the track to success. We’ve talked about realistic goals saving money, now let’s talk about why that happens.
Here’s an example for clarity. You set a goal of gaining 100 followers next month. You don’t reach that goal, and actually only gain 50 followers.
Next month you need to evaluate your goal. The first option is lowering your goal to something realistic (closer to 50), and the second option is keeping it the same. Since you’ve recognized that your initial goal didn’t get close to success, you’ll obviously lower your goal.
Understanding and evaluating goals helps you make smart financial decision which leads to long-term financial returns.
Beating the Competition
The hard data tells us that most companies fail to execute their strategies, and a large part of that failure comes down to a lack of business goals and objectives. And so the easiest way to get a leg up on the competition is simply setting your own business objectives and goals. It’s that simple.
Getting Your Business Off the Ground
Business goals and objectives are essential to starting any business, but they’re just the beginning steps. Beyond setting attainable goals you’ll also need to get your business registered with the government.
Registration can be a tricky thing for someone not familiar with the process, and that’s why we’re here to help. We make registration a breeze and are here to walk you through the process step by step.
So if you’re looking to register your business, get in touch with us. We’re here to help you get your business started.