Business goals

How to Set Business Goals, Step by Step

What are the business goals?

Business goals express what a business aims to achieve over a period of time. To be effective, business goals must be specific and include a date by which they must be achieved. Specificity and timing allow organizations to measure whether they have achieved their stated goals – and, if not, how far they have fallen short.

“Business goals are how companies keep their businesses aligned,” said George Westerman, senior lecturer at MIT Sloan School of Management.

An organization can set as many goals as it wants, and it can set goals for the company as a whole and for individual units within the organization. Business goals can also be divided into short-term goals, medium-term goals, and long-term goals. But all business goals must identify a specific target that the company aims to achieve within the specified time frame, said Jennifer Jones, senior research consultant in industry practice at Info-Tech Research Group and SoftwareReviews.

“Increasing the production department by 20% over the next three years” is an example of the specificity that constitutes a business objective, she said.

Business objectives identify what the business aims to achieve, but they do not indicate how the organization plans to achieve them. The corporate strategic plan usually lays out at a high level the actions that the organization intends to take to achieve its goals.

George Westerman

It is also important to note that, in many companies, business goals are not synonymous with business goals. Some organizations differentiate the two by defining business goals as accomplishments or milestones that can be achieved in support of and along the way to achieving the business goal.

Additionally, business goals are not the same as a mission statement or a vision statement, Jones noted. These high-level statements, unlike business goals, usually state why the organization exists and how it sees itself fulfilling its mission. They animate “the organizational culture of a company and answer the questions: ‘What do we do? Who do we serve? How do we serve them?’ “, she said.

Why is it important to set business goals?

Although the concept of a business goal seems basic, setting business goals is considered a key ingredient for success.

Indeed, business goals, when done well, play an important role in shaping day-to-day activities and decisions. They help the company, from executives to entry-level workers, to know and understand the priorities of the organization.

Jennifer JonesJennifer Jones

Thus, each employee has the ability to prioritize team decisions, as well as individual actions and activities, which will help them support the organization in its quest to achieve its business goals. It then helps the organization stay focused on what matters most: the crew rowing together to the same finish line, Jones said, with deadlines to motivate them to do what they need to do to reach the destination on time.

“Without business goals, an organization becomes rudderless and can be steered in conflicting directions,” she said. “Goals that are linked to a larger strategic vision provide direction for the entire organization. Well-designed goals provide clear direction, motivate, and set tangible goals for your business to work towards.”

Business goals help set the direction for business departments and help them know if they are succeeding, she added. For example, the IT organization must support business objectives by identifying the people, processes, and technologies that enable business success.

“IT can do this by participating in its own strategic planning exercises and clearly documenting the processes it is currently involved in and the processes it needs to develop,” she said.

Benefits of having business goals

Setting business goals and measuring progress against them provides companies with the following benefits:

  • a clear, concise and shared understanding of what success is, especially when objectives and key results (OKRs) are included in business objectives;
  • a way to communicate priorities and align workers, teams, and business units who might otherwise not know how their roles and responsibilities align with achieving business goals;
  • a framework to better measure accountability, as the contributions of workers, teams and business units can be assessed based on how well they have achieved established OKRs; and
  • a way to motivate and engage all employees.

Steps to Set Business Goals

Here are six steps to setting business goals:

  1. Assess the current state of the business, as well as industry, market, economic, demographic and other trends. There are different methods to analyze and measure the status of an organization, SWOT analysis being one of the most commonly used approaches. The SWOT framework guides business owners through a process to identify their business’ strengths, weaknesses, opportunities and threats – hence the name. Specifically, it helps business leaders identify what is working and what needs improvement; what new or expanding markets, products or services could support the company’s growth; and the obstacles, challenges, competition and other factors that threaten growth and even survival. Benchmarking and market analysis provide additional insight into these areas.

    A SWOT analysis helps organizations set business goals.

  2. Establish specific goals for the business to achieve based on business analysis and factors that present opportunities for growth and threats that pose challenges.
  3. Set a timeline for each goal; many business owners and managers set short, medium, and long-term goals, then articulate a specific timeline for each category or individual goal. Business leaders should consider industry and market factors when determining timelines; startups and companies in fast-moving industries should have shorter and tighter deadlines, while well-established companies might opt ​​for goals with longer deadlines.
  4. Establish when and how progress against goals will be measured, who to hold accountable for achieving each business goal, and how they will be held accountable.
  5. Incorporate business goals into the organization’s business plan and develop a business strategy that will drive the business toward its goals by identifying and incorporating milestones that can mark progress. “Goals are set at the top, but then they need to trickle down so that each business unit can translate how they apply to their unit,” Westerman said.
  6. Communicate business goals throughout the organization and align roles, responsibilities, and deliverables assigned to business departments, teams, and individual employees with stated business goals. “Every person in the organization needs to understand the goals they’re aiming to achieve,” Westerman said.

10 best practices for setting goals

Executive advisors and researchers offered the following best practices for setting goals:

  1. Set clearly defined, specific and simple goals that are well articulated.
  2. Set clear timelines for when you want to achieve each goal.
  3. Create goals that quantify and measure progress and success.
  4. Set ambitious but achievable goals.
  5. Solicit feedback from employees at all levels of the organization to uncover new opportunities, as well as increase buy-in.
  6. Consider the company’s mission and vision statements and ensure that all business goals are aligned with these.
  7. Understand the external forces that impact your business; Jones said doing a PESTLE analysis can be helpful. PESTLE is synonymous with political, economic, social, technological, legal and environmental factors.
  8. Use the Business Model Canvas, a business model, which Jones says can help companies uncover potential business goals.
  9. Look for outside voices. “Interview key customers and accounts, which allows you to get direct feedback and feedback and can inform your strategic plan,” Jones said.
  10. Use SMART, a common framework used to set goals. The framework defines five well-defined goal attributes: specific, measurable, achievable, realistic, time-bound.