Setting business goals is one of the most important skills that business leaders and managers can learn.
Thousands of people use Google to search for “goal setting theory business” each day. What are they looking for? Practical advice, such as business goal setting worksheets/templates, and the background theory on how to use goal setting to build more profitable businesses.
Below, we’ll outline the definition of goal setting in business. We'll also discuss how to set proper business goals using a mix of theory and goal setting business examples.
Definition Of Goal Setting In Business
To set effective business goals, it’s helpful to start with a definition of goal setting in business: creating a plan or trajectory for one’s company, career, and/or employees using a timeline of expectations and outcomes. This definition is based on the concept of goal setting theory, which was created by psychologist Edwin A. Locke.
In his studies, Locke found that individuals were more productive when they created concrete and actionable goals. Goal setting theory in business suggests that having a previously established long-term plan of action and business goals creates critical direction and focus as you make daily business decisions.
Learning how to set business goals is often the first step in business strategy development. If your goal is to become twice as profitable, this will lead you to make very different decisions than if your goal is to double your market share. In the former case, you might want to raise prices. In the latter, you may do just the opposite.
How To Set Business Goals
Now that you have an underlying definition of goal setting in business, it is time to explore how to set business goals. While there are multiple ways to set business goals, there are a few key things to focus on.
The most important thing to remember in setting business goals: make them clear and actionable. Instead of creating goals that are general or undefined, a clear goal is quantifiable and specific i.e., it has a deadline, strategy, plan, and desired outcome.
To make the process of setting business goals easier, you can utilize a business goal setting template or worksheet to structure and plan out your business goals. Then, once you have created a list of goals with deadlines and outcomes based on your chosen template, you will need some form of accountability structure to make sure that the goals are actually accomplished.
In some cases, creating accountability means assigning a specific employee, manager, or team to ensure that a given business goal is accomplished. However, when setting business goals that have a social good or community component, publicizing business goals is an even better way to create a culture of accountability.
Business Goal Setting Template
Templates and examples can be invaluable to structure the process of setting business goals. To start, some businesses utilize a SWOT Analysis to understand what near and medium term things must be addressed to reach their long term goals. This is very much a “strategic” goal setting template. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and there are multiple examples online of how this acronym can be used to set the priorities for your business.
Creating SMART goals is important whether you are setting broad, long-term goals like “double market share in three years” or highly operational near term goals. Incorporating multiple key tenets of goal setting theory, SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Based. It is one of the most popular goal setting frameworks. By changing the language of your goals to include quantifiable metrics, deadlines, and ranking by importance, making goals SMART increases long term success.
However, SWOT and SMART are not the only goal setting business templates. There are multiple goal setting business examples, such as OKRs and MBO (Management by Objectives) which are just as effective for structuring and setting business goals.
The Importance Of Goal Setting In Business
Let’s unpack the importance of goal setting in business. The primary benefits of setting clear business goals include better alignment, clear direction, and increased productivity. Get the heads of Sales, Marketing, and Operations in alignment. Choose a key business goal for the next year, like cutting costs by 5%. These leaders can provide direction to their teams that result in decisions throughout the organization that lead towards lower costs. Clearly outlining business goals with actionable steps, deadlines, and metrics of success makes it easier to track the long term progress and growth of a business.
By creating SMART goals and working through a SWOT analysis, business leaders can create goals that can be accomplished. Then, the data compiled can serve as proof of the success of a business. Additionally, it can become the basis for creating new goals, both internally and externally. Accomplishing goals is also a great way to boost morale within a business, so it is important to celebrate every milestone.
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Conclusion
There are a myriad of benefits to goal setting in business - regardless of industry or business size. Setting business goals is the first step in effective business strategy development. Any business leader that ignores it puts themselves at a serious disadvantage. To get help for your team to become more effective, see our corporate training offerings.
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