Key Learning Outcomes
- Develop clear and well-defined goals to help you set the direction for your business and to ensure you and your team work towards a common purpose.
- Understand that when goal-setting, you can dare to dream big at the beginning as you can always fine tune goals during the planning process.
- Learn how to set SMART goals that will give you the greatest chance of success.
- Examine the case study business for examples of goals and their potential impact on the business.
“People with clear, written goals, accomplish far more in a shorter period of time than people without them could ever imagine.” Brian Tracy
Goal setting is the first major step when embarking on the business planning process. We like you to set your goals and objectives up front and then fine tune or add to them after you have finished all of your market research. When setting your goals, start by thinking about what success will look like for you and your business in 12 months time. It is important to remember that the goals at this stage are not set in stone and you can be bold in your thinking.
After doing your research, you may decide that you are aiming too high or too low in some areas, or that there are opportunities you had not previously thought of. It is likely that you will add further definition to the goals, but it is important at this point to let your mind run free. Imagine you are sitting down 12 months from now. What have you achieved? What has changed? What areas have you improved in? What does your business look like?
You can begin the goal setting process by making a list or by using the mind mapping method. You may find that you have several goals or ideas that are similar – group these together. Also keep the SMART goal-setting principle in mind to ensure your goals are not simply vague ideas or too general. To be SMART the goal must be:[wlm_ismember]
Specific – It should be clear what you are aiming to achieve.
Measurable – How will you know that you have achieved the goal? There should be a quantifiable indicator.
Attainable – The goal needs to be possible and realistic.
Relevant – The goal needs to be relevant to the business.
Timed – This creates a sense of urgency and gives a time frame for the achievement of the goal.
A simple example of this is to look at a goal to “do more exercise” – what this means to one person is going to be vastly different to the next. It is also important to look at why the goal is being set. Why do you want to exercise more? If the answer is to get fitter, then exercising once a week might be more but is unlikely to help you to achieve the greater goal, that is, to increase your level of fitness. To turn this into a SMART goal, it would be better to say, “I aim to increase my fitness level, and for the next 60 days will exercise a minimum of four times per week, walking one hour every Saturday and Sunday and doing yoga classes Tuesday and Thursday evenings.” It would now be easy to determine if this goal had been achieved at the end of 60 days.
The same applies to your business goals. You need to be able to ascertain every quarter whether or not you are on track. Even though the business plan is being set for 12 months, not all the goals need to have a 12-month time frame. Some of your goals might be short- term, for example 30, 60 or 90 days. The important thing is to ensure you and your team understands what you want to achieve and how you will know when you have reached your targets.
How many goals should I set?
A large number of our clients ask how many goals they should have. There is no right or wrong answer. However, we do find it is better to have a small number of very clearly defined goals rather than a long list that can seem overwhelming and lacks focus. While you are setting a 12-month plan, remember it is not a prescriptive blueprint for the next 12 months, rather it provides a clear direction and focus. Things will change during the 12-month period. We have had clients who set goals and then, through a new level of focus and determination, reach them in the first three to six months, leaving them to re-evaluate and set new challenges earlier than planned. On the flip side, we have seen clients who, after embarking on their plan, have found that circumstances changed so significantly that they also had to change their thinking and re-set their goals. Regardless, in 100% of situations, the plan gave the businesses more focus and the knowledge gained through the process proved invaluable.
For most businesses, the goals will revolve around improving performance. We find the most common areas that the goals fit into are:
Profitability – To improve profit, you need to either increase income or reduce expenditure. Therefore, if one of your goals is to achieve higher profit you will need to further investigate both these areas.
Revenue – To increase revenue you will need to increase the number of clients you deal with, increase the amount each client spends or increase your prices.
Efficiency – For clients that are looking to increase their level of efficiency, we usually suggest looking at the systems and processes. Often it may be that technology is not being used to its full advantage or the team requires training to fill knowledge gaps.
Growth – Clients often set goals around business growth, usually looking to expand their range of products and services or expand into new markets.
Brand – The issue that usually arises in this area is how the brand is marketed in order to attract or retain clients.
Looking at the goals for the next 12 months in our case study business, ‘The Best Beauty Salon’, you can see that they are focused on revenue, profitability and efficiency. They have set eight goals (see below) that they feel are achievable and would have a significant impact on the success of the business if achieved in the next 12 months.
- To increase market share in the secondary market area from 2.1% of all female residents to 5% in 12 months.
- To increase the average annual spend per client by 15% within six months through the introduction of additional multi-treatment packages.
- To commence a targeted nurture program to convert non-regular customers into loyal clients. Target to re-book 12 past clients for a treatment within 60 days.
- To increase market share from 3.2% of male residents in the prime market area to 10% within 12 months through the introduction and promotion of a range of specific male-oriented packages.
- Increase the average profit margin of all treatments through increasing the average number of treatment hours booked per week, from the current 90 hours (44% capacity) to 132 hours (65% capacity) within six months.
- Increase the profitability of body treatments from 12.3% to 25% within six months through increasing the number of treatments performed each month. Commence a targeted marketing program offering an introductory program to existing and new clients.
- Reduce the number of the business owner’s treatment hours from an average of 35 per week to 25 per week through the promotion of individual therapists as experts in each field.
- Build team skills in re-booking old clients and up-selling treatment packages through weekly training.
Refining your goals
After setting your goals, the next step is to conduct research into your business’s current performance and your market. You will see that the goals for our case study have specific measurements in them. It is likely that when setting the goals initially, you are not able to be this accurate with the numbers. For example, you may think you know your market share, but after conducting research, find that it is higher or lower than you expected. After finishing your research, you will be able to finetune your goals in line with the new information and insight you have gained. You might also uncover some areas of opportunity that you had not previously thought of, or you might find that an area you thought would be worthwhile does not offer the level of return you were expecting.
Case study note
When you go through the learning articles and look at the case study, you will see that for The Best Beauty Salon the offering of body treatments is considered a strong point of difference. And while this is still the case, as no competitor offers the service, the owner has found through research that the treatments provide the salon with the lowest profit margin in the business. A goal was then added to address this issue and it will allow the owner to make a decision within six months as to the value these treatments add to the salon.
Embrace the next section of the business planning process, Point of Difference, as we know that this is often the most valuable for our clients.[/wlm_ismember]
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