A goal, or the lack thereof, can be life-changing for individuals and businesses. For a business, failing to set and accomplish sales revenue and other goals can be a doors-closing event. For example, without revenue goals, there is no revenue forecast, which a company needs to solidify plans to make and deliver products and to obtain financing to pay the related expenses. Consequently, it’s important to know what a business goal is and be aware of its significance. It’s equally important to recognize valid business goals and how to avoid unintended issues that may result from achieving them.
Definition of a Business Goal
A sound business goal is a target that's specific, measurable, achievable, relevant and time-bound. Such goals have an intrinsic quantitative or qualitative value that makes it worthwhile to consume company resources to achieve them. For example, a company might want to increase sales volume by 10 percent in 12 months. As an alternative, a business may prefer to grow profits by increasing sales volume by 15 percent, increasing profit margins by 5 percent and decreasing costs by 7 percent. The quantitative value of these particular goals is an increase revenues and profits. In turn, their qualitative value may include enhancing a firm’s standing within its industry and increasing customer awareness of company brands.
Importance of Objectives
Hall of Fame baseball catcher Yogi Berra said, “If you don’t know where you’re going, you’ll probably end up somewhere else.” Like Berra, businesses set goals to specify what a company hopes to achieve during a time frame and to alert employees to efforts that leadership considers worthwhile. Business goals also focus a company’s leadership on what day-to-day objectives a company must achieve, such as ramping up a production line by 15 percent or hiring employees with a particular skill set, to accomplish its business goals. In addition, goals set standards against which a company can compare its actual performance.
Examples of Company Targets
Steve Peterson writes in “Business Plans Kit for Dummies” that business goals may include profitability goals, development goals and day-to-day goals, as well as problem-solving goals and innovation goals. Whereas achieving a certain level of profitability is the primary goal of any business, business leaders are also concerned with ensuring employees develop an expertise, such as accounting or quality assurance. Business leaders also attempt to address issues that may include persistent shipping delays or a production line backlog. Other goals might include developing innovative products, implementing state-of-the art manufacturing processes or improving the manner in which sales or production orders are entered and processed.
Unintended Effects of Aspirations
Although business goals are set to ensure a company achieves its mission, the effects of goals are not always positive. For example, Enron committed to billions of dollars of debt that was inappropriately shifted from its balance sheet to those of multiple partnerships to fuel the company’s growth. In another example, to remain competitive and maintain its target market standing, Ford Motor Company produced and marketed the Ford Pinto before dangerous design issues were resolved. As a result, the company was charged with criminal homicide because it knowingly sold unsafe vehicles.