Ask Andi: How do you set business goals and track follow-through?
Thoughts of the Day: Set business goals. Follow a process. Make goals challenging. Be specific. Brain dump. Create a list of unedited material. Then edit it. Work with others throughout the process. Prioritize. Keep goals visible. Use reporting systems. Transparency matters.
Business goals and how to set them
The clearer everyone is about where your organization is headed, the more likely they can support that vision. Set a destination. Then give your organization purpose by working steadily towards it.
Consider the roadmap analogy. Let’s say you set a goal to travel from NY to California next year. Compare that to a declaration that you’re going to pick the fastest, shortest route and means of transportation to get you from Buffalo to San Diego, so that you arrive by 3 pm on January 10. The former could lead someone to think you’re planning a leisurely drive across the great Midwest, ending somewhere on the west coast south of Oregon anytime in the coming year. The latter goal puts you on a direct flight, landing in the southern-most major city in the continental United States at or before a specific time and date.
Many owners start and end by declaring they intend to pursue a growth strategy in the upcoming year. Unfortunately, that statement leaves a lot of room for interpretation.
- What growth?
- More revenue? Employees? Customers? Fans? Which ones?
- More profits? Equipment? Expenses?
- What is that supposed to grow?
- By when?
Goals are the main reason why your business exists
Make sure everyone recognizes what you expect the organization to tackle in the upcoming year. For example, if you’re thinking about revenue growth, you might not be happy if the company sold only $1 more than last year. But you’d be thrilled if it sold twice as much as last year – although you’re doubtful that would happen. So somewhere between $1 more and twice as much as last year is the right answer. Narrow the gap.
Add to buy-in by getting people in the organization involved in setting goals. Ask managers and employees what they want to accomplish. Challenge them to do better, achieve more and learn about new things. Ask for specifics about what would cause them to say they had a great year.
Set goals based on these questions. Work off current numbers from Finance. Make sure things add up.
- Do sales goals hit their revenue target?
- Has customer service hit retention goals?
- Have Operations improvements led to higher profit ratios?
- Does Human Resource training lead to higher profit ratios?
- Did Finances improve their ability to report on results?
- Are Marketing efforts on track with new business development?
Steer them in the right direction
If there are areas of the shortfall, pull people in and explain the problem. Ask them to close the gap. Let them debate and propose solutions. Working out the details of how to hit the overall goals will help everyone get clear on what needs to happen.
Goals have limited value without a reporting system. Regular meetings and reports that track facts, and analyze key indicators are all essential. Many business owners lose out on their goals because they lack a routine for follow-through.
Set up weekly, monthly and quarterly meetings, with specific agenda, attendance list, and reporting assignments. Ask people who are responsible for departmental goals to meet with their staff regularly and then meet with you to provide updates.
If there are problems, don’t let things slide. Challenge everyone to demonstrate progress towards their goals. Post reports where they are visible. The more people can see, the more they can get involved.
Looking for a good book? Key Performance Indicators: Developing, Implementing and Using Winning KPIs, by David Parmenter.
