Why Your Small Business Needs a Goal
Here’s a fundamental truth: to achieve success, you need a goal. Think about it – a goal is the desired outcome that defines success for any person, business, or organization. In other words, you can’t truly succeed without a goal to strive towards. So, it’s vital for the success of your small business to have a clear objective.
Still skeptical? You might believe that a highly intelligent and motivated team can blindly launch a business and eventually find success through sheer force of will. Maybe they’ll stumble upon unplanned challenges and conquer them by pure chance. But let’s be real – that’s highly unlikely. The key to success lies in setting a well-defined goal and pursuing it relentlessly.
How Victory Begins with Goals in Business (and Soccer)
Imagine a hypothetical soccer match taking place on a crowded field. Team A functions like a well-oiled, professional soccer club. Now, picture Team B as a group of individuals who are remarkably skilled at soccer, even better than any other team worldwide. However, they’re strangely unaware that the purpose of the match is to win by scoring the most goals.
As the match kicks off, Team B gains possession of the ball. Noticing the excited crowd, they begin to perform theatrically impressive maneuvers and tricks that could earn them a spot in the Futboleros Soccer Entertainers – often dubbed the Harlem Globetrotters of soccer. While the audience is entertained, they’re also slightly puzzled. Eventually, Team A seizes the ball, and Team B anticipates a dance-off-style entertainment competition. But instead, Team A promptly scores the first goal. The crowd erupts in cheers.
Eager to garner the same applause, Team B elegantly moves the ball around the field in an incredibly choreographed performance and kicks it into the same net that earned Team A their praise. Unbeknownst to them, they’re now two goals behind.
The analogy could go on, but the message is clear: without knowing your business goals, you’ll be as successful as Team B in our imaginary soccer match. You might make some impressive moves in business, but will you stay afloat or achieve profitability? It’s less likely than the 2.6% chance of overcoming a 2-0 deficit in soccer, just like Team B faced due to their ignorance of soccer’s ultimate goal. In business, as in soccer, you need goals to achieve success.
How to Determine Your Goals
In soccer it’s obvious, the goals are the goal. Fortunately, it doesn’t have to be that much more complicated in business. Any business at its root has some sort of financial motivation. This desire can almost always be manifested as a goal tied to revenue, profit, growth, or a combination of the three. The metrics your business has as its goals are often referred to as key performance indicators (or KPIs). The goals or KPIs then become the benchmark for the company’s success.
Even other entities, like non-profit organizations, also operate with financial goals. They may have an overarching goal related to advocacy or furtherance of a social cause, but they still need money to accomplish those objectives. Even if you’re committed to social responsibility as a key part of your business, you ultimately need some level of financial success.
Goals Depend on Your Business and What Motivates You as an Owner
Your goals as a small business owner should reflect what you want out of your business. Do you just want to be your own boss? Do you want to make your existing dental practice the largest in your city? Do you just want your brand-new doctor’s office to not go under before it becomes profitable? Or maybe you want something else. Whatever it is you can convert it into a real goal and benchmarkable KPI.
If you’re running a lifestyle business as the sole owner, you may only be concerned about how your business can help you live the happiest life possible. In that case, you may have read that people’s happiness peaks at $75,000 per year. Given that a reasonable goal for your business would be to earn at least $75,000 in profit per year to pay yourself.
Another popular model is to combine two different goals. For example, a dental office might want to set a growth goal of increasing its revenue by 10% each year for the next five years. At the same time, they may want to maintain a profit margin above the dental industry average which was recently reported to be 14.8%. The dentist should then calculate how many patients would yield that 10% growth and include that number of patients in the goal.
Or imagine a doctor’s office similar to the dental office, but let’s say it just opened. Since they are brand new, instead of a percentage they could set their growth goal to a static number like 360 patients in the first year. In this scenario, their profit margin may be very small or even negative. That is because their fixed costs will be spread among very few patients. Additionally, they will need to spend more money on marketing to acquire their first new patients. But if the physician is good, each patient will stay for five or more years. In that case, the business should set a goal to become profitable within one year or to reach the industry average within five years.
What About My Industry?
You can do the same thing with any business in any industry. Research what sort of revenue numbers are average for a company of your size in your industry. If you can’t find revenue numbers, you could try to find or estimate how many customers you could add per year. You can then multiply that number times the average value of your existing customers.
If you are brand new, research the typical growth rate and average customer value for that industry. You may need to be creative to acquire this data if you can’t find it using Google. For example, if you’re going to open a restaurant, find a similar restaurant in another city. Grab a meal, study the menu, and ask your server what people typically order. You can use this information and even your receipt to estimate the revenue per customer. You could even watch how many customers visit the establishment during peak and off-peak times. And use that data to estimate the number of annual customers. With these two figures, you can ballpark the annual revenue by multiplying your estimates for revenue per customer and the number of annual customers.
Success Depends on Goals and Execution
Establishing goals is a crucial step in achieving business success, but they ultimately serve as a benchmark. Goals provide a means to measure your accomplishments, while education, experience, hard work, and perseverance are the driving forces that transform goals into thriving businesses.
In ancient Rome, success was built on a foundation of clear objectives and strategic execution. Emperors, generals, and merchants alike understood the importance of setting goals and working tirelessly to achieve them.
Drawing from our soccer analogy, to win a professional match, you need to recognize that the objective is to score goals and perform like a seasoned athlete. Similarly, to excel in business, you must identify your goals and conduct your enterprise like a shrewd entrepreneur.
Have a story about how goals made or broke a business? Let us know in the comments. Need assistance setting goals or help with any other aspect of business strategy or marketing? Get in touch and we’d be happy to consult with you and your business.