LB3: Quick Goal Setting for Time PoorScott Williams
Goals for your business are critical, otherwise, how do you know where you are heading? But, if you are not used to setting goals for your business, the first few times can be rather overwhelming. There is a lot of advice on what they should look like. The range of choice in targets and directions can be so overwhelming that you just never get started! This article walks you through a very simple way to get started with goal setting that will see 3 year, 1 year and quarterly goals set in under 1 hour!. Yellow Belt
A subscription to Full Access will enable you to work with the entire Quick Goal Setting for Time Poor Leaders Briefing.
Why have Goals at all?
Let’s say you have decided to go on a holiday and family and friends are keen to go.
The very next question is; where are we going?
They need to know because there is:
- Travel and accommodation to book.
- A choice of clothes to pack.
- A timetable for all to go to work out.
- A car to service.
- A host of other things necessary to prepare for which you need to know the destination.
It’s the same for your business. You can’t just say “we are going to improve the business” and walk away. No-one knows what “improve” means in your mind until you articulate the direction that leads to improvement.
How Complex Is Goal Setting
It can be quite a detailed process; but it doesn’t have to be complex to get a reasonable set of Goals. The following approach should take you well under an hour.
It can be done by answering 3 simple questions!
Q1: Next 3-5 years
Think where you would like your business to be in the next 3-5 years. Arguably, there are only three basic types of goals for small business:
- I want to grow my business as fast and as far as possible.
- I want a fairly comfortable lifestyle with sufficient money and time to enjoy my life.
- I want to sell my business in the next 3-5 years.
Choose one and then flesh it out in more detail.
You want to grow your business rapidly and as fast as you can.
You need to get a little more detail around this broad goal so that you, your staff and other related people can share your concept for the next 3-5 years.
Typically, you might put down some dot points to address any of the following:
- How deeply into debt are you prepared to go?
- A clear description of the product or services that you aim to specialise in for your growth.
- The geographic area that you want to service in the next 3-5 years.
- Any other similar issues that scope out, in a little more detail, what your business looks like.
Note: at this stage we haven’t talked about sums of money and other questions of greater detail.
These are always very difficult to work out and can be quite overwhelming for someone not very experienced in business plans, budgets and strategic planning.
At this first approach to goal setting, you don’t need that sort of detail; all you need is a clear direction.
It is an entirely reasonable goal for many small business people to be heading for a comfortable lifestyle with a “Cash Cow” type of business.
There is usually a few dimensions to what constitutes “comfortable” in your mind. Take a moment to list some of them out in dot points.
A typical list might cover such things as:
- Your annual take home wage.
- The amount of time you want to dedicate to the business and to other parts of your life.
- What “toys” you would like to have, including such things as cars, electronics, furnishings, travel and so on.
- A reasonable Profit level over and above the owner benefits mentioned above.
Remember that we are talking about 3-5 years in the future, write down your ideal comfort rather than trying to work out what you can achieve.
You are starting from a destination here (comfort) and working backwards to the present to see how to get to your “comfort” status.
Many businesses will be sold at some future date. If you are an older person, you may be looking to exit your business with a nice lump sum of cash to retire or go into another business.
The strategy for running a business you are planning to sell is rather different to the other 2 strategies.
You need to position your business to be attractive to someone who is buying. They are not necessarily going to have the same goals of growth or comfort that you have. Put yourself into the mental perspective of a buyer.
At this stage, you do not need to spend a lot of time on working out what your buyer looks like and would want in your business. That is part of the strategy process that will come out as you tease out your strategy further below.
Q1 Wrap Up
In this very easy step you have taken, maybe, 10 or 15 minutes at the most to think about where you would like to be in 3-5 years.
This is the destination you want for your business.
Once you have identified that destination, just like taking a holiday, you will know what to pack and how to prepare to get to that destination in very broad terms.
It is now time to think about how you get to your destination goal.
Q2: The Next 1 Year
Most of us can see ahead, with reasonable clarity, where we would like to be in 12 months time en-route to our destination goal in 3-5 years time. What this 1 year way point looks like will depend on which of the generic destination strategies that you chose in Q1.
If you chose this generic destination, in 12 months time you want your business tuned for growth. This means that all the necessary people and systems will need to be tuned for growth so that you can maximise your rate of growth.
Realistically speaking, it is going to take you some time to get your business to grow while you get the “Right People on the Bus” and the systems and finance into a condition where you can grow.
It is not going to be realistic to set yourself a one year goal of a third or fifth (for 3 or 5 years) of your final goal. In particular, you haven’t set a final goal for what your business looks like in 3-5 years, other than the fact that it is going to be tuned for growth.
Therefore, your 1 year goals are going to be more “spin up” and positioning your business ready for major growth. You have probably also made a couple of experiments at growth while you work out your product range and necessary systems. A typical 1 year goal may be to have positioned the business ready for fast growth and begun.
If you are looking at Comfortable as your destination goal, your 1 year strategy will focus primarily on 2 areas:
- Establishing the Revenue streams necessary to generate the Profit that you will ultimately need to leave you with the owner benefits that you consider to be comfortable.
- A tuning of your production systems so that they work as efficiently as possible and they are only dependant upon you to the extent that you want to be involved in the business.
Your first year goal will be identifying a way point for Revenue and time commitment, which you can continually refine, to get you to your 3-5 year goal.
- You feel that you needed $120,000 in take home pay and fringe benefits in 3 years.
- You are presently at $70,000 take home pay and benefits.
- You would need to get another $50,000 take home pay over the next 3 years, or $20,000 per year, to give you a margin of safety.
- A take home pay of $20,000 can be reverse calculated to work out what is the necessary Revenue minus Expenses = Owners Benefits.
- You can calculate a Revenue target that is necessary to give you the $20,000 increase in take home benefits.
At this stage you will probably be working reasonably intensively in your business to grow it as fast as possible.
Another goal would be for you to start thinking about a person to become your second in command who will remove a lot of the day to day operational tasks from you.
You then have the amount of free time that is your target in your 3-5 year goal.
If you chose an Exit Strategy for your 3-5 year goal, then a realistic first year goal is to clearly understand the nature of your target purchaser and what they would be looking for in your business when they buy it.
There is quite a body of literature on this topic in 12Faces.
Go to the article: How Thinking Ahead Leads to Profitable Business Exit Sale for the links to various strategies.
Therefore, your Year 1 Goal is to understand your target buyer and begin to re-invent your business to become as appealing as possible to that target buyer.
Q3: Next Quarter Goals
Once again, we continue with the theme that it is difficult, and arguably not very productive, to sit down and do an extensive business plan and budgets when there are a large number of unknowns on how to proceed.
Throughout 12Faces, we spend a lot of time talking about rapid decision making techniques, for example:
- 80/20 Rule Menu
- Theory of Constraints (TOC) Menu
- Take Advantage of Agile/Scrum/Kanban to Increase Productivity
All of these techniques are designed to reduce a very large, and often overwhelming, range of choices to something achievable. They reduce what you could do in the next quarter down to just a few that you have the best possible chance of achieving.
We can help you work through this with our StrategyTree methodology.
But, on day 1 you may find this unnecessarily detailed.
To rapidly (less than an hour) work out what you want to do in the next quarter, we have developed our TrendBoard methodology.
This allows you to sit down with a glass of wine and spend less than an hour working through how you are positioned on all the important “Levers” that you need to pull and push to get your business where you want. Rank them by importance and what state they are in. This gives you the highest ranking opportunities for you to look at in the next quarter.
Goal Setting Wrap Up
Early on in this article we asked how complex goal setting needs to be.
The answer is that you can do a quite reasonable 3-5 year broad strategy for your business in under an hour if you focus on it.
Almost certainly, this strategy will change, become clearer and more detailed as you become more experienced and you begin to move down your path to your destination. That is quite normal. There is a military adage that “the whole plan goes out the window the moment the first shot is fired“.
This means that even if you had a highly detailed program, it is going to change as circumstances, and quite possibly your preferences, change.
Arguably, there is not much point to have a very detailed plan, unless it is forced upon you by a bank. We are very keen on a system of finding a destination and then moving as quickly as possible (as Agile as possible) toward that destination goal; adjusting for circumstances as you proceed.