Strategic business growth is a goal of most entrepreneurs and business leaders. Strategic growth is the deliberate and planned efforts of a business to expand its operations, increase its market share, or enhance its financial performance. However, this growth cannot happen without the business setting and accomplishing solid strategic goals.
Unfortunately, many entrepreneurs and business owners do not truly understand the importance of strategic goals and the role they play in the success of a business. That is understandable given there are so many types of business goals. In this article, we will look at the concept of strategic business goals, some examples, and what makes them different than tactical goals.
What Are Strategic Goals
Strategic business goals are critical high-level objectives set by a company to steer its overall direction and development. These goals are typically broad and long-term. They are the framework that helps a company with its operational planning and decision-making.
Strategic business goals are important because they help a company focus on where they are heading and its destination. This helps ensure that a company’s resources and efforts are concentrated on key areas vital for growth and success. This focus is essential for avoiding distractions and aligning all departments and employees toward shared objectives.
Companies can respond effectively to changing market conditions, remain competitive, and achieve sustainable long-term success when they set good strategic goals. If a company wants to accomplish strategic growth it needs to set good strategic goals and execute its tactical goals. Let’s take a look at the difference between strategic goals and tactical goals in the next section.
Strategic Goals vs Tactical Goals
Sometimes people confuse strategic business goals and tactical goals. While the two are interconnected, they serve different purposes in an organization’s overall planning. They also serve different purposes when it comes to the execution process of those goals. To help illustrate the difference, think of strategic goals as a way to set the destination while tactical goals map out the journey.
Strategic goals are high-level objectives that define the long-term vision and direction of a business. They are typically broad. This is because they tend to focus on long-term progress.
Also, they often span several years instead of months. When a business has long-term goals, those goals should involve multiple considerations. Strategic goals will often be things like expanding market share or developing a new product line. These types of goals do not happen overnight and are much more involved and involve a lot more planning and participation from everyone in the organization.
In contrast, tactical goals are more specific and short-term objectives. Their purpose is to execute the broader strategic goals. They are the actionable steps that an organization takes. However, these steps are usually in shorter intervals. Oftentimes, they are daily, weekly, or monthly actions. Tactical goals are more detailed and focus on the immediate actions required to move toward the strategic goals.
For example, if a business wanted to diversify its revenue streams, that would be its strategic goal. Its tactical goals would be to launch a successful marketing campaign for a new product in the next 3 months. Tactical goals are often set by middle management and are more narrowly focused, measurable, and time-bound.
Both types of goals are important. However, knowing the difference between the two can help leaders increase the odds of reaching success.
Examples of Strategic Goals
Increase Total Revenue by $3M in the Next 2 years
Increasing total revenue by $3 million in the next two years is a strategic goal because it sets a long-term target for the organization’s growth and financial performance. This goal requires a comprehensive approach. Most likely, reaching this goal would involve multiple departments and strategic initiatives.
It may require the business to focus on market expansion, product development, or service enhancement. This goal aligns with the broader vision and mission of the company. That means the goal will help guide decision-making at the highest level. Also, achieving this significant financial milestone often necessitates substantial planning and resource allocation over an extended period. This is why this is more of a strategic rather than a tactical goal.
Reduce Costs by 15% in the Next 12 months
A great strategic operational goal is to reduce costs. This example of cutting costs by 15% falls under the category of strategic because of the process it could take to accomplish this goal.
When attempting to reduce costs, there are a lot of factors to look into. If the business manufactures its own products, it would need to look into the cost of materials. From there, they may look for alternatives that are more cost-effective or negotiate with vendors.
However, if the business is a drop shipping company, it would need to examine the cost of advertising its products. It could also look into low-cost marketing methods like content marketing. Both examples would require time, effort, and consistent focus. The solutions rarely appear overnight which would not qualify this goal as tactical.
Diversifying Revenue Streams by Adding 2 New Products
Diversifying revenue streams is a strategic goal aimed at reducing dependency on a single source of income. This approach mitigates risk and enhances stability by spreading income across various channels, products, or markets. For instance, a company might expand into new geographic regions, develop different product lines, or enter into new market segments. By doing so, the business can safeguard against market volatility and ensure a more stable financial future.
Increasing Customer Conversion Rates by 10%
Increasing customer conversion rates is a goal focused on optimizing the effectiveness of marketing and sales strategies to turn prospects into paying customers at a higher rate. This can involve refining marketing messages, improving user experience on digital platforms, or enhancing customer service.
By understanding and addressing the specific needs and pain points of their target audience, companies can persuade more potential customers to make a purchase. This should help increase revenue over time.
Acquiring a New Company Within 3 years
Acquiring a new company is a strategic goal often pursued so a business can enter a new market. Instead of starting from scratch, a business can obtain valuable assets while eliminating competition. This can include acquiring new technologies, expanding the customer base, or gaining expertise in a specific area.
It is a good strategic move to buy a company because the acquiring company can absorb the strengths of the company. They also expand their product line without having to develop a new product. In essence, the acquisition of a competitor could help a business reach several strategic goals all at once.
Reducing Employee Turnover to 17% During the Next 12 Months
This strategic goal would fall under the category of internal strategic goals. By setting a goal to reduce employee turnover in a year, the strategy should force the company to look into the factors that may have kept their retention rate higher than they deem acceptable.
Leaders would have to examine company culture, career growth opportunities, salaries, benefits, and other things that may be causing low retention rates. This is strategic because the benefits of lowering employee turnover will benefit the company in the long run.
For example, as retention rates drop, so does the need to spend resources hiring new employees. The average cost of replacing an employee varies between 30% and 150% of their salary. Retaining employees can help a business keep costs low without having to replace too many employees annually and also help the company culture which should also attract the best talent.
Strategic growth involves setting long-term goals and implementing steps to achieve them. When setting strategic goals, business owners need to understand their market, competitors, and internal capabilities. Once they understand these things, they can take action to reach their goals and the overall potential of their businesses.