Goals are used to help a business grow and achieve its objectives. They can be used to foster teamwork and help the business describe what it wants to accomplish. Setting goals is an important part of any business plan.
Part of the planning process, business goals describe what a company expects to accomplish over a specific period of time. Businesses usually outline their goals and objectives in their business plans. Goals might pertain to the company as a whole, departments, employees, customers, or any other area of the business.
The Importance of Business Goals
Businesses should not fear setting goals because there is absolutely no downside to the process. Goals give a business direction and help measure results. There are four detailed and important reasons why a business should have goals.
1. Measure success – Good organizations should always be trying to improve, grow, and become more efficient. Setting goals provides the clearest way to measure the success of the company.
2. Leadership cohesion – Setting goals ensures that everyone understands what the organization is trying to achieve. When the leadership team clearly understands what the business is trying to accomplish, it provides greater rationale for the decisions management might make regarding hiring, acquisitions, incentives, sales programs, etc.
3. Knowledge is power – If an employee knows and understands the goals, it becomes easier for him or her to make daily decisions based on the long- and short-term goals that were established.
4. Reassess goals – When goals are set, they can be monitored on a regular basis to verify the business is headed in the right direction. If the business is not achieving or moving towards accomplishing its goals, then changes or adjustments need to be made.
Pitfalls of Developing Business Goals
Setting business goals can go wrong if not done correctly. Seasoned business managers put a great deal of time and energy into developing and implementing business goals. There are two big pitfalls a business manager should try to avoid.
1. Setting unrealistically high goals – When a goal is perceived to be unreachable, no effort will be made by the employees to achieve them. A businessperson needs to set realistic goals so that the employees can come together as a team to achieve them.
2. Setting vague and ambiguous goals – Goals that are not specific enough do not lead to action and are useless. If achievements cannot be measured against the businesses expectations, then a manager cannot observe any progress towards the goal.
Measuring the Success of Business Goals
Establishing goals is only half the work in a business plan. Once the goals have been explained to the employees and a plan has been developed to achieve those goals, it is important to review those goals at certain times during the year. A business manager needs to take a ‘time-out’ every so often and ask himself or herself the following questions:
Is the business on target to achieve our goals?
Is a course direction needed to get the business closer to achieving the goals?
Are the goals still relevant with the ever-changing business world we live in?
Are the employees still focused on helping the business achieve its goals?
The answers to these questions will help management decide if corrective action is needed. For example, if a business is not headed in the right direction, the manager might want to get all the employees together to review what is happening and make changes to help achieve the goals. Whether the management is good or bad, it still needs to keep the employees informed about how the business is performing and how the employees are doing with respect to the goals.
Business Goals in Action
Let’s consider a couple of examples of business goals in action. The RND paper company is under pressure from its competitors. The upper management has decided to add several new goals to help combat the external threat. Two of the newest goals include ways to streamline operations to produce a less expensive product, and they added more funding to their marketing budget. After three months, management reviewed the goals and determined that their position in the market had improved.
Like the RND paper company, the Ace paper company was also under pressure from its competitors. However, in their case, upper management decided not to implement new goals to help minimize their risk. After only five months, the company had lost six percent of the market share and subsequently their quarterly profits were down.
Both examples illustrate the consequences that can arise from deciding whether to implement goals or not. Goals are fundamental to any organization and are a necessity to its very survival.
Let’s review. Business goals describe what a company expects to accomplish over a specific period of time and are very important for the health and well-being of any company. Goals help a company measure its success, as well as help with overall planning. While establishing goals is never a bad idea, companies do have to be careful of common pitfalls. Ensuring the goals they set aren’t unrealistic, or vague and unclear, is necessary if they are going to succeed.
Business Goals Vocabulary ; Importance
- Business goals: express what a company plans to accomplish over a certain time period
|Measure success||always trying to improve, grow, and become more efficient|
|Leadership cohesion||rationale for the decisions management might make|
|Knowledge is power||employees know and understand the goals|
|Reassess goals||monitor on a regular basis|
|Setting unrealistically high goals||employees feel set up for failure|
|Setting vague and ambiguous goals||employees have no incentive for success|
Students should be able to accomplish the following at the conclusion of this lesson:
- Describe business goals
- Identify the importance of setting business goals
- Contrast the problems of setting too high or ambiguous goals