by Jim Schmersahl and Angela Pinion
In our previous article, we discussed how your mid-year financial review is crucial to the success of your business, and how your review measures and informs your progress in meeting your short- and long-term goals and objectives. Let’s take a moment to step back and talk broadly about your goals and objectives.
Goals and objectives, when implemented correctly, help you define and then achieve desired outcomes in specific business scenarios and for your business overall. Many people use the terms “goals” and “objectives” interchangeably, but they have distinct meanings. Understanding the underlying concepts that contribute to each foster’s success in short- and long-term strategic planning.
A goal is a realistic outcome a business aims to achieve within a specific period. Goals are usually closely connected to a company’s or owner’s vision and purpose. Objectives are the smaller, specific, measurable steps needed to reach your goals. Objectives can act as benchmarks to track your progress toward a goal.
If we were writing a war movie script and not a business article, the objective would be to take the hill and the goal to win the war; here, the objective might be to improve sales gross margin with the goal of making the company a more attractive acquisition target.
Goals and objectives are crucial for providing focus, direction, and motivation for yourself, your management, and other employees. They clarify what needs to be achieved, guide your actions, and enable progress tracking. Essentially, they provide the framework for success. Be sure to communicate the specific actions you expect from your employees to achieve your objectives (goals may or may not be appropriate to share).
Foster an objectives-oriented culture of accountability
Clearly communicate your goals and objectives to your team, as this ensures everyone understands their role. Provide the necessary resources and support to help your team thrive and succeed.
To be most effective, your goals and objectives need to be Specific, Measurable, Achievable, Relevant, and Time-bound. A nice mnemonic for this is you need SMART goals and objectives.
As a fun aside, mnemonics like this are a nice tool; Every Good Boy Does Fine got me through music lessons. An effective memory jog mnemonic we sometimes use to remember the list of exceptions to the 10% IRA penalty is HIM DEAD TED (feel free to call if you just have to know).
Define your goals by identifying key areas of focus
Determine what you want to achieve and why. Not all goals are equally important, so focus on those that have the most significant impact on your objectives (Specific). Remember, as a business owner, your business goals also must align with your personal goals, so be sure to include yourself and your family as a priority.
Include quantifiable metrics to track your progress (Measurable). This allows you to assess your success. Ensure you set realistic goals (Achievable) that align with your business strategy and vision (Relevant); they should be challenging but attainable.
After defining your goals, break them down into smaller, specific, Time-Bound actions; these will serve as your objectives. Outline the actions required to achieve each objective, including the necessary resources, timeframes, and accountability measures.
When setting your goals and objectives, create benchmarks: quantifiable financial indicators that inform you and your employees about your progress in meeting your goals. Do not wait for year-end to evaluate and make mid-course corrections; it’s not fair to you or your employees who are working to support you and your business goals.
Regularly monitor your progress against your defined metrics and timelines. If you are not on track, identify the reason(s) and make the necessary adjustments to your plan. Engage your team and solicit feedback to help you refine your strategy.
Your mid-year review is a critical step along your path to success. While some of your goals may not be financially quantifiable (creating time to coach your child’s softball won’t show up in margin improvements, or at least it shouldn’t), many of them are or should be measurable as part of your mid-year review. Now is the time to evaluate your progress, and take action.
Jim Schmersahl, CPA, is a Partner at Schmersahl Treloar & Co. He can be reached at 314.966.2727. Angelina Pinon is a Manager, Client Accounting & Advisory Services, at Schmersahl Treloar. She can be reached at 314.966.2727.