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How to create SMART goals for your business
Business Basics

How to create SMART goals for your business

12 min read

Highlights

  • SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
  • This format can be used for all kinds of goals to make sure you’re setting your sights in the right direction.
  • These goals can be effective if implemented correctly, but if they are too rigid they can be discouraging—make sure to leave space for reevaluating your SMART goals over time.

What are SMART goals?

Every facet of your business will involve setting and striving to meet specific business goals—but how can you make sure you’re setting the right goals for your organization? SMART goals are one way to create the structure necessary for clarity, focus, and productivity. The SMART framework is a way to establish a shared definition of success for the entire team.

The SMART goals acronym stands for:

  • S: Specific
  • M: Measurable
  • A: Achievable
  • R: Relevant
  • T: Time-bound

When your goals meet all of these criteria, you’ll have a better idea of why they are worth pursuing and how you will measure success.

When to use SMART goals

It’s easy to set vague goals. For example, you probably want to increase revenue quickly—this is a great result to have, but if your goal is this broad, it will be harder to achieve. SMART goals provide more structure and make sure you’re heading towards achievable results.

Use the SMART structure whenever you want to measure progress, meet a specific deadline, or make sure everyone on the team understands what you’re trying to achieve.

How to write SMART goals 

Follow this format to make sure you’re creating SMART goals. This can also serve as a template for any goals you want to achieve.

S: Specific
Be specific about what the goal involves. What do you need to accomplish? Who is responsible for meeting the goal? What steps will the team have to take to achieve it, and what resources are available to them?

A vague goal would be increasing revenue—a specific goal would be to increase revenue by 8% by increasing advertising of the products that have a relatively high profit margin. This makes it clear that the marketing department will have to take on a new task in order to meet a specific goal.

M: Measurable
If you’re going to set goals, you also need to track progress. This is why measurements are key. What metrics will you use to determine success? What numbers do you want to hit?

A measurable goal might be increasing the open rate of your emails by 20% over the course of the next six months. You can measure this rate over time to make sure you are getting closer to success.

A: Achievable
Ambitious goals are a good thing, but they also need to be achievable. Make sure your goals are realistic considering your resources and timeframe.

For example, doubling your sales in the next month could be achievable for businesses that are just starting out, but might be impossible for established companies with a limited budget.

R: Relevant
Why are you setting this goal? Is it tied to a KPI? Will it have an actual impact on your bottom line? How will it increase sales or profit? Understanding why this goal is important and relevant helps the team contribute to its ultimate success.

A relevant goal will be assigned to the right team, at the right time, and will take into account the current market. It should also align with the long-term goals and vision of the company.

T: Time-Bound
Deadlines can be very motivating. Make sure you have a clear timeline that you want to adhere to for the duration of the project—not just for the final deadline, but also for check-ins along the way.

You might want to hit a certain quota by the end of the year, so list that date in addition to the quotas you want to hit each month in the leadup to the final deadline.

A SMART goal example

Let’s say you start out with the very general goal of growing your business. To be clear, this is a good goal to have, but if you apply the SMART framework, you can help crystallize it into something more clear and achievable. Let’s run it through the system and see how it changes.

Time to get specific
What aspect of your business do you actually want to focus on for this goal? Do you want to increase your profit margins? Or raise awareness of your brand? The more specific you are, the better.

Let’s say that after thinking it over, you decide you want to expand your business by opening a second physical store in a different part of town. This is a specific goal with a clear outcome.

Decide what to measure
Continuing with the SMART process, let’s figure out how to make this goal measurable. What aspect of this goal will you use to measure success? Is it the square footage of the new store? The amount of foot traffic the new location receives? Or is it the price of the new lease?

For the purposes of this project, you could decide that you’ll measure the cost of the new location and how long it will take after renting to get the store up and running. Let’s say you want to pay less than $4,000 each month in rent, and you want to get the store ready for customers within the first month. These are specific aspects that you can measure and track.

Can you achieve it?
Now it’s time to do a little reflection. Can you afford this new location? Will you be able to hire enough employees in time for the grand opening? Will you have time to raise awareness about the new store? Make sure the goal is realistic.

If you’ve considered all of the different factors, you can move on to the next step.

Find out if it’s relevant
Make sure you know why you are setting this goal. Will a new location increase profits? Will it be worth the investment? Does it align with the long-term goals of the business? Does it make sense to do this now, or is the market too volatile this year?

These are tough questions, but it’s better to explore them early on instead of while you’re negotiating the price of rent.

Determine your timeframe
Decide on a timeline for opening the new location, and every step you’ll need to take along the way. This means you need a timeframe for saving up the money you’ll need, for scouting out possible locations, and for getting the store ready to open. You can always adjust these dates as needed, but having something to shoot for can be helpful in the early stages.

The pros and cons of SMART goals

There are many advantages to SMART goals. They provide direction, allow your team to monitor progress, and make sure that the vision is realistic. They make it clear why these goals matter so everyone can be on the same page.

There can be some disadvantages in the SMART format. If the goals are too rigid, they can be discouraging or limit creativity. To encourage flexibility, you can always set aside time to reevaluate goals and make sure they still work for your team.

If you want to achieve your financial goals, Divvy can make a difference. Schedule a demo today to learn how we can help you manage expenses, stick to your budgets, and build credit.

The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided “as-is”; no representations are made that the content is error free.

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