If a business is small and just starting out, it may seem unnecessary to think about and define the goals at all. Small family-run businesses, for example, may feel they are trucking along just fine, with a small inventory to manage, a small consumer base and a manageable level of demand.
A business may not necessarily be working towards exponential growth and profitability, for example, but goals are important for non-financial reasons as well. Setting goals — no matter how big or small — is still extremely important for many reasons.
In this article, we outline how good business goals can impact the business. We also look at examples of bad goals — goals which don’t have an overarching benefit for the business and may even have a negative counter-effect.
Before we begin, make sure you know how to set good business goals.
There are many benefits to setting business goals; the most obvious one is financial. By setting financial business goals, businesses have something specific to work towards. This makes it easier for businesses to plan and organise work around reaching these financial goals, which provides a useful framework for productivity and efficiency.
Another benefit of financial goal setting is that it provides some level of direction and structure to staff. Without at least a vague idea of how much profit the company is looking to make in future, it can be hard to plan out work adequately in order to reach that goal.
For example, a business may decide to set a goal of doubling its profits over a given period of time. This will allow the business managers and directors to lead staff in the directions which are required to reach that level of financial profitability.
As a bonus, setting a financial goal for the business can help improve motivation in the workplace. If staff don’t have anything to work towards, morale, motivation and productivity may start to decrease.
Increases productivity and efficiency
Another benefit of setting business goals is that it can help increase productivity and efficiency. Let’s say, for example, the business manager sets a goal to complete a specific project in 1 months’ time. This will instantly motivate staff to increase productivity because they have an exact timeframe within which to manage their work.
An example of a bad goal is one in which the timeframe is too vague, for instance, ‘in the future’. Goals like this do not provide the right level of motivation or direction to increase productivity.
Rewards and incentives
Another benefit of setting goals is that, if set so that reaching them produces a reward, staff will be incentivised to be more productive and efficient. If you own a retail business, for instance, you might like to offer staff commission for selling a certain amount within a certain timeframe. This is a well-known way of not only increasing productivity but also of improving staff morale and motivation.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.