In the world of business, you may sometimes hear the terms “goals” and “objectives” used interchangeably, but they actually mean two different things. It’s important to know the differences between business goals and objectives when planning an effective business strategy. Although both business goals and objectives are equally important, they’re not the same.
Not knowing the difference can have you focusing on the wrong metrics and working towards undefined targets. Understanding the difference between a business goal and a business objective can save you time, energy and prevent unnecessary headaches. This article will outline the look at business goals vs business objectives and why it is important to know the difference.
What is a Business Goal?
A business goal is a broad statement of something your business strives to achieve. Business goals are usually intentionally vague and used to describe an overall intention. Business goals help you track your company’s overall success and keep tabs on big-picture, abstract concepts.
One example of a business goal could be to increase profits. This is a very broad idea that can be addressed through many different tactics. Setting business goals helps identify long-term milestones your company needs to reach.
Here are some examples of a business goal:
- Maximize profits
- Improve customer service
- Reduce carbon footprint
- Change brand identity
Business goals are intentionally loosely defined so that the methods used to achieve them can be diverse. For instance, every company aims to increase profits, but not every company goes about it in the exact same way. The relationship between goals and objectives facilitates specific, action-oriented progress.
One great thing about establishing business goals is that it sets your company’s top priorities. Assigning business goals creates added focus on specific aspects of company growth, which is a more effective alternative to running around trying to do everything at once. This also saves you and your team from wasting time in areas of business that don’t really need all the attention.
What is a Business Objective?
On the other hand, a business objective is much more specific. Business objectives are achievable, realistic, short-term tasks which must be completed in order to progress toward the overarching business goal. Objectives help track the progress your company makes toward its bigger plans.
For example, if your business’s goal is to increase profits, some objectives that might help you succeed include changing prices, introducing a new product, or implementing a new sale to entice customers. Objectives should be actionable and concise to avoid confusion. Sometimes, creating a deadline can also help ensure the task gets done.
Here are some examples of a business objective:
- Host 5 industry-specific events next year
- Cut operating costs by 20% over the next two years
- Reduce customer wait time by 10 minutes this year
- Increase sales by 50% next quarter
For every business goal you set for your company, you should set about three objectives which you can put into action. This keeps business goals from falling into obscurity. Holding team members accountable with reward systems and objective-tracking strategies can also help put those goals into terms of real-world moves.
If you have trouble setting business objectives, try using the SMART method. SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. These are ideal criteria for an objective you want to prioritize. Another method is called the PACT method. PACT stands for Purposeful, Actionable, Continuous, Trackable. This approach takes a “yes” or “no” approach to your actions instead of measuring them. Both are effective in achieving your business goals. Test both methods if you are not sure which will work best for you.
You also don’t want to overwhelm yourself or your team with too many objectives, as this can be counterproductive and lead to burnout. Instead, it’s recommended you stick to 1-3 realistic objectives at one time. When running a business, try not to assign more objectives than this to one crew. This can prevent employee exhaustion and can keep everyone’s energy up to see the tasks through.
Using Them Together
Business goals and objectives are most effective when working hand in hand. Giving your company’s business plan additional structure helps provide accountability, a means of recording progress, and it’s even good for morale in the workplace.
80% of employees who work toward established goals feel that their work is taken seriously and perform better on the job. They’re also 7.7 times more likely to say their employer provides them with career growth opportunities. Needless to say, happy employees create a happy, functioning company.
Think of the last time you decided to start a New Year’s resolution. Like most people, you probably established an overall goal. For example, you may have decided you wanted to lose weight in the next year. That’s very similar to setting a business goal. However, you likely didn’t succeed unless you implemented thoughtful, actionable objectives, such as working out for 20 minutes a day or cutting 1,000 calories a week.
Why it Matters
Organizational goal setting can actually set your business apart from the competition, even on a level consumers might not see. More than 80% of small business owners don’t track any company goals or objectives, leaving them vulnerable to the whims of the industry.
Additionally, if you have employees, you already know that their success is your success. Goals and objectives actually play a large role in overall employee performance on the job. Employees are 42% more likely to achieve goals that are written down and tracked. Imagine what that could do for your business!
Know the Difference
Take the time to review your current business goals and objectives to make sure that you can make a clear distinction between the two. It’s important to track your company’s progress toward your overall goals so that success becomes achievable. Being able to measure and record business objectives can also pave the path to company growth in the future.