What is your New Year’s Resolution? About 40 percent of Americans will make a resolution this year, yet less than 20 percent of them will be successful. Despite the fact that most of us look to improve our surroundings, we have a very low success rate when it comes to identifying what those improvements are and acting upon them.
Unfortunately, the same trends seen on a personal level can be seen at the business level. Most businesses do not have a clear strategy or focus on where they want to be in the future and, as such, do not have goals established to get them there. For example, a common goal in business is to increase revenue (especially after the last few years), yet this type of goal setting has two main issues that usually prevent it from being maximized:
- First, it is not specific enough, so we don’t know what level of increase would be deemed a success or what specific steps we will take to achieve the goal.
- Second, it might not be aligned with our overall goal of increasing the value of our business. For example, we could win some new contracts but if they are unprofitable or a drain on our resources they could actually lessen our bottom line or have minimal impact despite significantly increased effort.
Another interesting statistic with regard to New Year’s Resolutions is that as people age, the likelihood of them setting resolutions decreases. The thought being that over time people get disenchanted with this process, as the success rate is low. However, the success rate is a function of poor implementation, rather than the goals themselves. If we can improve the way we set goals, then we can improve the likelihood of success and ultimately increase our chances of meeting our goals rather than leaving it to chance.
Before setting any goals, it is important to set your overriding goal first and then ensure all other goals are aligned. For example, if your primary goal with your business is to sell it when you reach 60 years and retire, then maybe buying a new facility when you are 56 is not a good goal. You would likely not own the new facility long enough for it to create significant value, and your resources might be best served being invested in other areas. Alternative goals that would be appropriate would be to determine who you would most likely sell to when you do sell, what value a buyer might place on your business in its current form and what parts of the business should you focus on over the next four years to increase its value the most.
Once you have an overall goal established, keep these three things in mind with all other goals and your chances of success will greatly improve:
- Ensure your goals are achievable. Setting goals too high can be demoralizing for your team if they have a very low percentage chance of actually happening. Setting goals that can be a stretch but have a good chance at being exceeded if the stars align can give everyone the right amount of motivation to work towards them.
- Be specific. Once you have determined your goals, start creating a plan around how to achieve them. For example, if you goal is to increase your revenue in 2011, you will need to determine specific targets to aim for over the course of the year: what type of clients you will want to win, how to increase revenue from and what your marketing plan will need to look like in order to achieve these specific revenue goals.
- Be flexible. Don’t lose sight of your original goals during the year. Monitor your progress throughout the year on a regular basis. If situations have changed or things aren’t working out as quickly or as well as you had predicted, feel free to adjust your goals rather than abandoning them once they look out of reach.
If you have questions about how to move your business to the next strategic level, please contact Austin Buckett.