What are the elements of a smart business goal?
You aren’t going to get very far in life or business without goals. Of course, like business ideas, goals can be plentiful and don’t always lead to great success.
So, what makes a smart business goal? What makes them effective? Who in your company should set them up? How are goals different from your company’s mission and vision? What is their role in fundraising for your startup? How might they relate or differ from your own personal goals as an entrepreneur?
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Here is the content that we will cover in this post. Let’s get started.
- 1. SMART Business Goals
- 2. S is for Specific
- 3. M is for Measurable
- 4. A is for Achievable
- 5. R is for Relevant
- 6. T is for Time Bound
- 7. How To Go About Setting Intelligent Business Goals
- 8. Who Should Set Specific Goals In Your Company?
- 9. Identify the Right People to Achieve Your Goals
- 10. How To Make Sure Your Goals Are Effective
- 11. Goals Versus Vision
- 12. Goals Versus Mission
- 13. Business Vs. Personal Goals For Entrepreneurs
- 14. How Do Goals Play A Role In Startup Fundraising & Pitch Decks
SMART Business Goals
‘Smart’ can also be used as an acronym when trying to set good goals in your business.
S is for Specific
A smart goal is specific. Instead of “we want to raise a lot of money,” or “build a really big company,” you would choose to say, “we are raising $100M in this round,” or are building a company that will be worth $10B.”
No matter what this goal is about, make it specific. This could be how many people you plan to hire this year. It could be driving a specific metric in your business, like sales in units, revenues, profit margins, or users.
It’s just not real, tangible, or attainable if it isn’t very specific.
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M is for Measurable
Those specific goals need to be measurable.
Not only do you need your goals to be specific, and have a defined target or barometer of success, they need to be measurable too.
Making specific provides something to measure by. Whether you’ve achieved that goal, or how close or far you are from achieving it.
Still, you need to have a means and a system for measuring your progress and performance on this goal. It needs to be on your radar. You need to have the tools in place to track it and be paying attention to it. Make a note of this as one of the critical elements of a smart business plan.
A is for Achievable
Thinking big, and being bold is great. In fact, it is necessary to create a successful startup and get it funded.
However, even those big, huge goals need to be achievable.
We often talk about making the impossible, possible. Things often seem impossible, until they are done. Yet, smart and reasonable business goals still need to be in the realm of possibility. They need to be within the laws of physics.
If you are stretching the limits of what seems attainable, then you at least need a plan. Break it down, and see how it is possible to get there. You may even need to tackle one of the smaller goals on the way to the big one first. In order to make it achievable.
If you don’t have a path there, with some reasonable chance of success, then it’s not achievable.
For example, on your way to building that $10B company, you might start with a goal of securing your first $1M in revenues, hitting a $1B valuation at your next funding round, etc.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
R is for Relevant
Is this goal really relevant and objective?
Today’s recent obsession with data and metrics, as with many long-held beliefs about what success looks like, has also become huge distractions, and rabbit holes that can be hugely and expensively distracting, and time-consuming.
Each goal needs to be directly relevant to what is most important, and what you really want to achieve. If it isn’t directly taking you there and is tightly correlated, then it is going to take you further from where you want to be going. It will eat away and drain your financial resources, time, and energy.
Be sure to differentiate between what is really important, versus vanity metrics.
For example, if what you really want is more net profit, then increasing your employee headcount, adding more users, or opening new locations, may not be relevant at all. So, factor in relevance as one of the key elements of a smart business goal.
T is for Time Bound
Smart goals are specific in nature and have a defined timeline.
This makes it even more tangible. It enables you to better focus on the goal, apply the resources needed to achieve it, accurately plan, keep the sense of urgency up, and stay on track.
So, give your goal a specific timeline and deadline.
Is this a goal that needs to be completed in two weeks? A month? Six months or a year?
Remember to make sure that is achievable. Whipping up a winning pitch deck, or hiring the best possible CEO in two weeks may not be realistic.
How To Go About Setting Intelligent Business Goals
Now we know the elements of a smart business goal, how do business leaders go about picking intelligent goals to focus on? How do you pick the right goals?
The obvious place to start is with your ultimate desired outcome for this business. Then break that down into smaller bite-sized pieces. There may be annual and quarterly forecasts and objectives, especially as a later-stage or public company. Though you will typically hone in on what you can achieve every six to 10 months, before raising another round of funding.
Then further break those goals down to what you need to be achieving each month, and week. This is critical for an early-stage startup that needs to be driving growth and showing real progress and traction.
Of course, those goals and how you plan to execute them should also be checked against your company values, and perhaps be reviewed with your advisors for their feedback as well.
Who Should Set Specific Goals In Your Company?
Who should be tasked with setting various goals in your businesses?
The knee-jerk reaction may be to say the founding CEO. Yet, that may actually rarely be the case. On the Dealmakers Show podcast, the most experienced entrepreneurs say that founding CEOs really only have three tasks that should be on their minds, and taking up their time.
- Casting the big vision for the company
- Ensuring that the company has enough funding to keep going
- Recruiting a great executive management team
As a part of these roles, there may be curating company culture, interacting with board members, and growing yourself as a business leader as well.
Everything else needs to be delegated down the chain as far as possible.
Your executives should be looking to their relevant department heads, who should be looking at their direct reports.
If you have the right vision and have hired the best team, then they ought to be able to identify, qualify, and set many of the goals they should be focused on.
The above three items may be exceptions to this. Such as, you may have a goal to raise another $15M in the next three months. Which requires hiring a CMO and CFO to head up the process. To whom you’ll need to clearly convey the vision.
Identify the Right People to Achieve Your Goals
Though, when it comes to setting goals for specific metrics, like users onboarded, driving up website visitors, creating a specific amount of content, or finalizing your next product, your team is much closer to many of these items, know the factors involved, and should be looked to for input.
Then again, you may need to turn to your cofounders, investors, board members, and other stakeholders to relay these primary goals, and get their feedback and blessing on them.
Or, some initiatives may come from the top. From your board and shareholders who actually have substantial voting and decision-making power. Remember, it is all about doing what is best for the company, and operating within the organizational structure that you’ve created.
Or, even if you have all the decision-making power, fully utilizing the resources, and experience that you’ve brought on board. Be very clear about who can set and achieve the various elements of a smart business goal.
How To Make Sure Your Goals Are Effective
There can be a big difference between setting great goals, and effective goal setting, and working effectively on those goals.
As with any type of goal, business or personal, they need to be highly visible in order to be effective. For example, your personal goals may be hung by your front door, used as your laptop screensaver, and phone lock screen.
Your team, who is expected to deliver on these goals, needs to know what they are supposed to be focusing on most. It will guide all of their decisions and actions. So, after telling them, and ensuring they understand it the same way as you do, they should similarly be made prominent and constantly visible.
This may mean being one of the key metrics they report on, or have on their dashboard every day. Mounting them on the wall. Or something else.
You have to keep repeating them too. There are so many distractions. If you are growing fast, then you will also be building out and adding new team members daily. All of them need to be on the same page.
You also get more of what is measured, tracked, and rewarded. Just as with team member behavior, and fitting in with your company culture and values. So, be sure you are incentivizing your team to accomplish these goals. As well as ensuring that they are not being incentivized in a way that contradicts these goals.
This may be in the form of year-end bonuses, short-term and ongoing performance-related pay, and other forms of recognition.
If you’re ready for more detailed information about how to set business goals, check out this video I have created. You’ll get a more comprehensive overview of this critical aspect of entrepreneurship.
Goals Versus Vision
What is the difference between your business goals and your vision?
Business goals are the smaller individual steps or factors which make the big vision possible.
Your big vision is typically laid out in your vision statement in your business plan, in your pitch deck, and perhaps put up on a big sign in your office, and posted on your website.
The vision is the big ultimate goal. It can be what the world will look like when you have achieved your company’s mission. Or the outcome of this company’s journey.
However, forward-thinking entrepreneurs which have operated several startups already are increasingly choosing more long-term and open-ended visions. Ventures that may not be fully realized for another couple of decades. Or which are large enough that they can continue to be strived for and built on indefinitely.
For example, if you are rebuilding the infrastructure for fintech companies, that isn’t a one-and-done. It may take 10 years to bring real change. At which point, you will be pushing to evolve that for what the world needs next.
The elements of a smart business goal are what enable the vision and progress towards it. Like funding, profitability, and growth.
Goals Versus Mission
Vision and mission statements are also different from each other. The vision is really the end product. The mission is what you are working on, and the purpose of your business.
For example, you may be on a mission to ensure everyone on earth has access to clean drinking water. This means your vision is every village, town, and city has their own fresh clean water supply in the form of wells, reverse osmosis, or something else. You may set a goal of 100k wells over the next 10 years. With your immediate goal this quarter being to fund and get your first three operating.
Business Vs. Personal Goals For Entrepreneurs
It is far too easy for founding entrepreneurs to intertwine their egos and existence with their startup companies. While it may be great to be passionate and dedicated, this can too often become unhealthy for them, and the companies that they are working so hard on.
Remember your personal goals and the needs of your family or others that you are responsible for when you are starting out. Have your own personal goals. Cling onto those and keep them at the top of your mind.
Be sure the vision and business goals you are setting continue to facilitate your personal goals and take you to them, not away from them.
How Do Goals Play A Role In Startup Fundraising & Pitch Decks?
The elements of a smart business goal will show up in your pitch deck and fundraising materials as milestones you set, funding as a goal at each round (including the investors you bring in), as well as for getting the company in shape to raise.
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