Having SMART objectives is very important when starting an endeavor. For example, to raise capital and shares you will need a business plan to present to lenders and banks.
In addition, a business plan will help you to generate a road map for your business in terms of what it will achieve and how you will achieve it.
It is important that you set out clear objectives so you know what you are aiming for. These objectives will need to go into your business plan.
You’ve likely heard the phrase “When you don’t know where you’re going, any road will do.” Setting the correct objectives will help you reach your ultimate goals.
The most effective way to use objectives is to set SMART ones. SMART is an acronym for Specific, Measurable, Achievable, Realistic and Time-Sensitive.
Your objectives should be specific and not ambiguous. If you are forecasting that your business will increase sales compared to last year then you need to be specific about what that increase will look like. For example, sales will increase by 12% by the end of the next financial year.
Objectives have to be measurable in order to identify if progress is being made or not. Avoid using vague terminology such as; the best, the largest, the fastest etc. Measurable targets should include sales results, net profit and capital expenditure.
Your objectives must be achievable. This means your business needs the capacity and resources available to achieve what you set out to do.
It is easy to be carried away by setting objectives based on enthusiasm. However, you need to be realistic when setting your objectives.
For example, if your business has on average increased sales by 10% each year, then stating that your sales number for next year will double is setting up the company for disappointment.
Targeted numbers should be backed up by supporting evidence to prove that they are possible.
Setting a date and a deadline is very important when creating objectives and goals. Not setting a deadline for when the objective will be achieved will likely cause delays and in many cases the objectives will not be achieved.
Avoid vague terms such as short or long-term. You need to have a clear and specific timeline for the accomplishment of each objective.
What’s so smart about SMART objectives?
Why has this acronym become part and parcel of project planning and performance management?
When objectives go through the SMART process, they become targets that bring focus, action, feedback and learning.
These targets help in the development of individual work plans, and also provide a road map for performance review discussions.
How Do You Write a SMART Objective Statement?
First or all, you must decide what exactly you expect to create, and how you will recognize the result when it comes to pass.
For example, “Our insurance premiums should make a minimum of $60,000 per month in sales by June 30, 2020, with a quarterly increase of at least 5% thereafter.”
A conversion objective could be “to increase the average value of all subscriptions processed in the firm to $100 per client in the next twelve months”.
The above SMART objectives are attainable because they are very specific regarding what needs to be done, they are measurable, and the time-bound aspect is also included in one short declaration.
Without the time factor the team responsible wouldn’t know when it has to achieve the target.
Reviewing the smart objectives can be done quarterly, semi-annually or annually. It all depends on the timeline that has been set on the targets.
In a nutshell, SMART objectives have the potential to focus attention, work plans, and commitment to performance targets.
If you would like to learn more about creating and using SMART objectives, contact us for a free consultation. Don’t forget to sign up for our newsletter for more interesting insights on business planning.