The road to success is paved in lessons of failure—82% of businesses fall victim to cash flow issues. Having performance goals will help you avoid losing track of where your business is going. The SMART system allows you to keep yourself and your employees on the same page.
Never heard of SMART goals? It is a system of performance-based business goals that can save you a lot of time and money. If you are looking for a new way to take charge and gain control of your business, keep reading.
Here is the breakdown of what Smart Goals mean.
What SMART Goals Mean
SMART is an effective acronym for each aspect of your business or personal life. SMART is your formula for performance goal setting and tracking progress. If you use this strategy, you can hold yourself and your employees more accountable.
What does SMART stand for?
S is Specific
Specifically, this is what you want to accomplish. Spell out your business goal without any caveats. For example, “I want to make $XX,XXX in net profit this year.”
Even if your business is not currently profitable, do not set your goal as “I want my business to turn a profit.” Define it specifically so that you can build a plan around reaching your goal.
M is Measurable
Next, we take that specific goal and measure what it will take to reach it. What metrics do you need to monitor to reach your goal? If you are trying to reach profitability, measure the number of sales or margins you need to hit.
Reaching your SMART goal may mean increasing your brand’s visibility or making adjustments to products to improve sales.
A is Achievable
Goal-setting is about being realistic. Goals should follow a hierarchy to keep things within reach. If you set a goal to become a millionaire by winning the lottery, there is nothing you can do besides buying tickets to achieve it.
Business-owners must learn how to leverage what they have with what they can achieve.
R is Relevant
Putting an effective plan together to achieve your goals involves addressing your needs. In the profitability scenario, maybe you struggle with overhead costs. SMART goals keep business owners accountable and challenge stubborn habits.
If you have ever watched Gordon Ramsay’s TV shows, you will know how common it is for business owners to miss the forest for the trees.
T is Time-bound
Goal-setting is nothing without a timeline. Procrastination is the rot that prevents every good plan from becoming a reality. Set realistic expectations that you can meet for yourself.
If you struggle with setting goals, then have someone close to you, who knows your habits, help you set your timeframe. When you miss your deadline, it is disappointing, but you will still perform better than you would have without one.
Creating Your SMART Goals
Now that you have an idea about what a SMART goal is, it is time to define them with your business. Performance-based goals require team participation. Barking goals down the chain of command are outdated and ineffective.
Start by asking your team what they see as attainable and necessary goals. Straddle the line between ambitious and conservative. Once you have mapped out your SMART goals as a team, your business should start to move with a purpose.
Words of Caution on Performance Goals
All goal-setting strategies should actively avoid falling into the traps of de motivation and despair. For example, do not let your performance take precedence over happiness. The mental health of your employees is more important than pure metrics.
Businesses that set hard performance goals to retain employment shoot themselves in the foot. Those overhead costs will slowly eat into profitability and your SMART goals go out the window.
Trust the Process
Performance goals are there to motivate you to change behaviors and strengthen confidence. By focusing on the success or failure of meeting goals, you are handicapping your potential. NBA players do not let one or two failures dictate their performance.
They have to trust the process and practice until they reach their goals. SMART goals are there to keep you focused on the things that will produce the greatest results. Making a New Year’s resolution is useless without teeth, goals without clear, measurable and time-based boundaries.
Expect the Unexpected
Establishing goals without any room for error or buffer is a recipe for stress. When unexpected setbacks show up on your doorstep, you need to adapt your goals accordingly. We can create some stability by creating a positive feedback loop.
A feedback loop is something that you can return to every time you do something to reach your goals in the short-term. The recent gamification of business and project management is a good example of building a SMART system of motivation.
Working SMARTER, Not Harder
SMART goals will define the path you need to take. SMARTER goals will help you stick to them and see that you don’t compromise. The additional E and R letters stand for Evaluate and Re-Do.
We all make mistakes, but it is important that we recognize and correct them. If things change with your business or you are consistently missing goals, evaluate them. Find any flaws or outdated elements, then Re-do them.
Businesses are organic and need constant leadership to succeed. The worst thing you can do as an owner is stubbornly fight against change. A strong work ethic does not guarantee success in today’s fast-paced world.
Redefine the Formula for Success
If you are nodding your head along with this guide, but feel held back financially, we understand. Formula Funding was established with small businesses in mind. We provide realistic solutions for businesses looking to push the bar for success.
With SMART performance goals, start planning for the next level of your business. We have experts on standby who can give you a free consultation on funding. Start here and find the answers to questions you’ve been searching for.
Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.