In a way, business success is just the realization of every goal that you set over time. With every goal that is accomplished, you are taking steps toward what you ultimately want to achieve as an entrepreneur or business owner. However, there are many ways to accomplish those goals. Some ways are better than others. One of the better ways is by setting SMART goals. We’ll take a look at what SMART goals are, their advantages and disadvantages, and some examples in this article.
What are SMART Business Goals?
SMART business goals stand out as a framework that ensures goals are effective and achievable. SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Each element of the SMART framework plays a crucial role in goal setting, making it a widely adopted strategy in various industries.
The “s’ in the smart acronym stands for Specific. This means that your goals should be clear so you know exactly what needs to be accomplished. This can eliminate any vagueness. The clearer the goal the more likely you will be to focus on it and the strategy needed to accomplish it. For a goal to be specific, it should answer the key questions: What needs to be accomplished? Who is involved? Where will it take place?
Your goals need to be able to be tracked and measured. This means that your goals should be quantitative so you can measure if you are on track or not. Think of it as the numbers for your goal. For example, a measurable goal could be increasing sales by 20% within the next quarter.
You should set realistic goals if you want to accomplish them. Your goals should be something you and your team feel are achievable. If they are not, you could get discouraged or lose motivation if you miss milestones.
Goals should also be relevant to your business’s mission and values. You don’t want to set goals that you can hit but really don’t contribute much to the growth of your business. For example, if you have a business that sells to other businesses (b2b), you may not benefit from having a goal of reaching 10,000 followers on Instagram.
SMART goals should have a deadline. Think of them as an expiration date. Without knowing the cutoff point, it will be hard to know if you are succeeding or failing. By having an end date or time for your business goals you can motivate you to take more action to reach your goal.
Benefits of Using SMART Goals
One of the reasons why it seems SMART goals are a go-to method for goal setting is because there are a lot of benefits to setting your goals this way. First off, because your goals are specific, it gives you clarity and allows you to focus more intently. When goals are specific, you become less likely to get distracted by other things that seem important but are not in line with your goals.
Also, since you are able to track your goals, you may maintain motivation in the process. If you’ve created a measurable goal, you will be able to monitor exactly where you are en route to your destination. That can help avoid the feeling of not knowing how much more ground you have to make to hit your targets.
Another benefit is that, since your goals are realistic, you are not setting yourself up for failure. It is important to set goals that stretch you. However, setting goals that are too lofty makes it harder to bounce back if you don’t reach them. But, when you use SMART to set realistic goals, you are getting a boost of confidence by logging some wins for you and your team.
The sense of urgency SMART goals create helps in prioritizing tasks and managing time. When there is a clear deadline, there tends to be less procrastination and more focus. Not only that, because your goals are relevant to what the business is trying to accomplish, you feel a sense of purpose when pursuing those goals.
Drawbacks of Using SMART Goals
While the SMART goal method is a great way to go, it’s not a magic bullet. There are some drawbacks to setting your goals this way. If you’re serious about reaching your goals, understanding these limitations is crucial.
One of the first problems that can arise is due to the time-bound aspect. When there is a deadline, the focus could switch too much on short-term gains. If you’re not careful, the goal accomplishment process can seem more transactional. It can also be tempting to take shortcuts to reach the goal.
Another issue that can come up is the way the method is highly structured. If the method is followed too closely, you may limit your flexibility and creativity. This is because you may have blinders on while focusing on your goals that you miss opportunities or stay in a well-defined lane.
One last downside of this is the opportunity cost of setting your goals too low. While it is important to not set goals that are too high, setting goals that are attainable, but too easy won’t help your business long-term. For example, you can set a goal of a 10% revenue increase because you know you can get there without much issue. However, you and your team may be capable of making that increase 30%. Since you set the goals too low to attain them, you may have missed out on 20% more revenue.
Examples of SMART Goals
Now let’s take a look at a few examples of SMART goals for business. These will give you some insight into what a SMART goal should look like and why it makes sense to set goals this way.
Example 1: Increasing Sales Revenue by 15% over the next quarter
This goal is Specific as it clearly shows what the company wants to achieve- a 15% increase in sales revenue. It is Measurable through the quantifiable target of 15%. It’s achievable as long as the company has the resources to pull it off. The goal is relevant because the revenue would directly contribute to the company’s growth and profitability. Finally, it is Time-bound with a clear deadline of one quarter.
Example 2: All team members to complete the course and pass the certification exam within six months.
This is an example of goals set for employees. The goal is specific because it states what the goal is for everyone to complete a course and pass an exam. This is something that can be easily tracked so it is measurable. If the certification goal is something that will help the business and is typically attainable in less than a year, then the goal also is achievable, relevant, and time-bound.
Example 3: Reduce operational costs by 10% over the next 12 months.
One last example that shows the same format. Operational costs are certainly relevant to any business’s goals. A 10% reduction is also something that is attainable for most businesses. Depending on the type of business, doing that within a year is time-bound and is most likely very realistic.
At the end of the day, your most important business goals should grow your business in some way. Using the SMART method, you create a potential to narrow down which goals will do that. Also, the method will give you a better opportunity to reach those goals.