Characteristics of Successful Entrepreneurs: A Step by Step Guide to Creating SMART Small Business Goals
December 28, 2015
Part one of a ten-part series
There’s a tried and true method for setting effective goals, and it uses the acronym ‘SMART.’ SMART goals are specific, measurable, attainable, realistic and time-driven. Being goal oriented is one of the 10 important personal characteristics of an entrepreneur. This is what motivates them to take on the challenge of starting and running a small business. Since the ability to set and achieve both long- and short-term goals is critical to your success as an entrepreneur, let’s take a look at the best way to do that.
Steps to consider when creating SMART small business goals
Step 1: Be Specific
By defining a specific goal, the entrepreneur makes it easier to understand the goal, and it makes it easier to determine when the goal has been reached. In order to design a specific goal, make sure you address the ‘what,’ ‘when,’ ‘where,’ ‘why,’ and ‘how’ of the goal. Let’s say you are an architect and you want to increase the number of jobs you win. Include the specific number of jobs in the ‘what’ of your goal: ‘I want to secure a total of 8 contracts.’ ‘When’ is the time period in which you want to accomplish this: ‘In 2016.’ Depending on your business, this could be a year, or it could be a monthly or even weekly goal. ‘Where’ and ‘why’ are pretty straightforward in this example, but write them down anyway. You may need to limit the geographic area where you take jobs in order to be efficient, so having that as part of your goal will remind you not to bid on jobs outside that area. Another reason for limiting the geographical radius is the cost of business insurance and coverage thereof. And writing down the ‘why’—in order to increase your revenue—will help you keep your ‘eyes on the prize.’ ‘How’ is one of the most important questions you can answer. Outline how you will find and win these additional projects. Perhaps you will approach past clients for referrals, or do more advertising. You might look at the way you respond to proposal requests to make your firm look more attractive to potential clients. It’s important to spend some time figuring out ‘how’ to reach your goal.
Step 2: Set Goals that are Made to Measure
Making your goal measurable will ensure that you know when you’ve reached it. It will also help in developing future goals. For example, if you are a personal trainer trying to shape up your business by increasing the number of clients you serve, you might set a goal to add 15 new clients in 2016. If May rolls around and you already have 15 new clients, good for you! But you may want to adjust your goal for the following year, since you reached it much earlier than you expected. Conversely, if you have only 8 new clients at year end, you might set next year’s goal at 10.
Step 3: Don’t Forget The Importance of Attainability
Setting attainable goals will help you to continue to strive for them. You need to reach that delicate balance between ‘challenging’ and ‘impossible’. This may take some practice. If your goals are too easy or too difficult to reach, they stop being motivating. If you are a salon owner, for example, you may want to set a goal to increase the amount of revenue your salon takes in. If you set a goal to double your revenue from the previous year, you may find that you simply do not have enough chairs or enough stylists to make that happen. On the other hand, if your revenue goal is a 10 percent increase, you may not be growing the business fast enough.
Step 4: Setting Realistic Small Business Goals
Your goals need to be realistic. This may sound as though it’s the same as attainable, but there’s a little difference. While you may be able to attain a goal of 25 new clients for your personal assistant business, that goal may be unrealistic because you may not be able to handle the workload during peak times, like year-end. Turning down work is often the most difficult task for an entrepreneur, but if your goals are realistic you may not have to do that.
Step 5: Time Bound Goals
Developing time-driven goals will make sure you stay on track for success. If your goal is to increase the revenues of your retail store by 20%, you might break that down so that you’re targeting an increase of 20% each month, compared to the same month the year before. This helps to keep you on track even if your business is seasonal. Similarly, if you own a photography business and you want to increase revenues by 20%, you might want to break it down differently. You might set a goal for a 10% increase by July 1, after all the June weddings, and another 10% by the time the holiday pictures have been taken.
Even if you’re not a ‘natural’ goal-setter, you can follow these guidelines to learn this quality. By setting and pursuing goals the SMART way, you improve your chances of success as an entrepreneur.