According to the U.S. Small Business Administration, only about half of new small businesses survive for five years, and only one-third make it to 10 years. To stand the test of time, it’s important to set goals for your business that are specific, measurable, achievable, relevant, and timely—in other words, goals that are SMART.
Growing a small business can be tough, but being small also has some advantages. You may not have the resources of larger competitors, but you can often be more nimble and focused. Your customer connections tend to be more direct and take place through fewer channels. Using these features wisely to reach potential customers through carefully planned SMART goals can have surprisingly good results.
In this article we start by defining SMART goals more precisely, then we move on to how they’re created.
What are SMART goals?
SMART goals are a recognised way to boost most aspects of a small business, from project design and management to marketing and broader growth strategies. They help you to keep things precise and targeted on your market and business performance, rather than settling for loose goals that might sound appropriate for any business. So here’s a more detailed definition of SMART goals.
Being specific about a goal or outcome leaves no doubt about what it is you’re trying to achieve. It forces you to dig deeper into what you have in mind, to create lasting clarity of purpose. It also helps to keep you focussed from initial planning to final evaluation.
To know whether you achieved a goal and when you got there, you need to set measurements from the outset that will signal success. Otherwise you can end up settling for less than you originally had in mind, or continuing on forever with no sense of when a particular goal has been achieved. From countable goals, such as production targets, to more qualitative things like customer satisfaction, you need to have a way of measuring progress and a clear end goal.
While it’s OK to set challenging goals, there’s no point in aiming for the impossible. You may be better to set a series of smaller, more achievable goals along the path to that big dream. That way you can develop better strategies and fine-tune the goal for each step as you learn more about the type of business you’re in, what your customers prefer, market forces and the ultimate end goal itself.
This helps to ensure the goal you set is relevant to your business and its needs. Your description of the goal shouldn’t sound like something a wide range of businesses could set their sights on. For example, rather than simply aiming to increase revenue and reduce costs, a delivery business might set a goal of reducing the average travel time between each delivery by 10%.
Including a time by which your SMART goal will be complete is another way to add focus and discipline to your business. It improves initial planning and promotes more efficient use of time. There’s nothing like staged deadlines and a final completion date to help prioritise time and effort. The timing of a project can be particularly important for businesses that have seasonal variations.
The important benefits of SMART goals
SMART goals help to ensure your small business plan is based on carefully considered steps for improvement and growth. Measurable outcomes keep you informed of progress and help to provide early warning when things are not quite going to plan. The creation of SMART goals becomes easier with practice, helping to boost informed decision-making, risk management and ongoing success.
Another important benefit is the strong sense of achievement and motivation SMART goals provide for everyone in your business. With poorly defined goals, it’s difficult to maintain a sense of progress, which can lead to frustration as unfocused effort doesn’t deliver the reward of reaching desired outcomes. With SMART goals, it’s easier to monitor, anticipate and celebrate genuine success that everyone understands.
How to create SMART goals
The first step to creating SMART goals is to make a start, any start, and simply refine things as the momentum builds. Here are some common approaches to help you get underway.
Use each letter of SMART
Write down your goal as you can best describe it at the moment, then start with S for specific. How can you make it more specific, what information do you need to do that, where could that information come from? Then move on to M for measurable. Are the measures of success reliable, sufficiently detailed and available to you? Can you improve on them? Who could help you with better measures? Then continue through the other letters, dipping back into earlier ones as new thoughts occur. How you record all this is up to you. If you like lists, use them. If you prefer brainstorming diagrams with linking arrows, go for it. The main thing is to keep your thoughts progressing, so highlight dead-ends and points where more input is required then move on and come back to them later.
Use the past to create the future
Channelling your thinking from the past to the present and then the future can often help refine aspects of your goal. Identify what you’ve already tried or achieved in the same area as your goal, define the situation today, then move on to what you think should be happening after various intervals, such as a month, three months and a year. It creates a natural flow from the known to a future focus you can refine using the SMART categories.
Start with a foundation of current data
Collecting measurable data about your business, your competitors and the market you operate in can often expose opportunities. It also helps you to keep things real and achievable as you refine your goal’s measures of success. Collecting current data and analysing it with an open mind ensures your SMART goals are built on a clear and reliable foundation.
Once you have a SMART goal well defined, it will help you identify the actions, resources, timeframes, dependencies and potential threats involved in pursuing it. This level of clear planning makes it easier to monitor progress and continue moving forward in an effective and efficient way.
SMART goal examples for small business
Here are some examples of typical small business goals made SMART for a particular business.
Make more money than last year.
|Increase sales revenue by 5% each quarter of this financial year, without increasing overall expenditure.|
Get more visits to our website.
|Increase average daily website visits by 15% over the next three months by creating a new ‘expert’ blog post every fortnight and promoting each one through increased social media marketing.|
Secure more customers.
|Increase our active customer base by two additional service contracts a month for the next six months.|
In the first example, the percentage is specific, measurable and thought to be achievable based on proposed low-cost action plans. Increasing sales revenue is relevant to the business and the goal is conservative, given the cap on expenditure. Quarterly stages keep it timely and allow for progress monitoring.
The second example is quite specific about how website visits will be increased. Website visits are easily measured and there is a clear goal of a 15% increase. Posting an article once a fortnight is achievable and the use of expertise articles is relevant to this services business and their target customers’ interests. Finally, there is a clear time by which the goal is to be achieved.
You can probably run the SMART filter over the third example yourself by now. It’s worth noting that it wisely specifies increasing the ‘active’ customer base, not simply adding new customers. That means any customers who aren’t regularly placing orders will be taken into account when it comes to measuring success, which keeps it relevant to the goal.
The SMART goal framework can be used for all sorts of things
SMART goals work because they clarify your purpose and strategy. They also encourage you to dig deeper by engaging with customers, colleagues and mentors. SMART goals can help you to improve all aspects of your business in pursuit of what you see as success.
Many people also use the SMART framework for setting personal goals. This can include anything, such as career progression, improved health, reaching life’s significant milestones or achieving bucket-list dreams. It’s all about knowing what success looks like and planning how to get there, so you can celebrate each achievement along the way and confidently pursue the next one.