People are always looking for means and ways to make a living or earn an extra cent, and starting a business or adding business projects are often viewed as the most likely options. However, while this may be just an optimistic, enthusiastic dream or idea, it might not be practical in the long run unless there are some basic goal setting features in place for a new or ongoing business.
In this article, find common SMART business goal examples that highlight the need to set business goals the SMART way.
The SMART Model
Business or project goals have to have SMART objectives. That is, they have to be:
Specific: with specific objectives and a specific game plan
Measurable: Quantifiable or able to be translated in numerical values
Achievable: It has to be within the doable range
Realistic: Not some wild-scheme idea which has no basis with the business, business settings or business trend
Timely: Goals have to be charted against time and not set indefinitely with costs, resources and manpower assuming indefinite proportions likewise.
SMART Business Goals - Example 1
SMART business goals have become the norm for setting goals in all businesses and projects, particularly in project management and change management. Here are some comparative examples of SMART business goals—some which are just not achievable and others which are achievable because of the SMART objectives that are in place.
Plans of ideas: You want to start a carpentry business and hence you buy some tools and let your friends and neighbors know that you are into the business race. At the same time you expect to earn a huge profit from your carpentry business plans.
Practical View: There is little to no success rate that can be achieved from such a plan in terms of profit. While tools may be readily available for use, this does not ensure the success of the business. You will have to outline a plan of action which says:
- I am going to start with making tables or styles A and B. (Specific)
- I am going to create 5 tables during the first month; 2 of A and 3 of B. (Measurable)
- I will total up all raw material costs along with labor cost and add a 20% to it as my profit margin. (Achievable)
- I will approach retailers to sell my furniture in their showrooms. (Realistic)
- I will start with this plan for three months before I make changes. Five tables will be created each month and put up for sale. (Timely)
From this example, one can understand the drawbacks to not following a specific plan of action. This example also emphasizes the need for specific SMART objectives that will make the business goal achievable. Once the five parameters for the SMART formula are adopted, there is very little chance for a goal to go off target.
SMART Business Goals - Example 2
Plan: A retailer intends to increase business profits by the end of three months and hence devises a plan that will involve his entire team of floor staff. Hence he divides his team into five different sub-teams based on the five departments of retail goods in his store. They are divided into team A, B, C, D and E and are briefed on their past and current sales reports. At the same time, the retailer has a brainstorming session with his team on how to improve sales in their respective departments and what he can expect for each. After the meeting, he comes up with a projected sales target of 10% more at the end of 90 days.
Alongside this, he instructs his team on how they may achieve this, while doing away with some old methods and adopting new.
Practical view: This approach to setting business goals is practical as it follows the SMART approach.
- The retailer’s plans are for a 10% profit by the end of three months. (Specific)
- The profit is for 10% and not a vague amount drawn up with just a passing whim. (Measurable)
- Each department is involved and the projected goal is based on reports and data prepared during the requirements gathering process of what the team can achieve, even if stretched to limits (Achievable)
- The goal that is set is entirely business related and not pulled out from some unknown source and expected to sell. (Realistic)
- The goal has a specific time limit and hence the retailer along with his team is focused to set further work strategies based on this time limit. (Timely)
SMART and SMARTER
The above SMART business goal examples highlight the fact that in order to set practical goals, it has to follow the SMART method. As from the above mentioned examples, business goals have to be Specific, Measurable, Achievable, Realistic and Timely. While the SMART model of business goals is followed for most businesses, some businesses take it a few steps further with the SMARTER model, where they evaluate and reward team members for the goals that are set. The SMARTER method acts an incentive for better quality goals to be achieved in record time.
Credit and Resource
Image credit: Author, Amanda Dcosta
Resource: Queensland Government, Business development - https://skills.business.qld.gov.au/starting/510.htm