Formalizing Business Objectives

We all set objectives, or goals, for our small business, whether we recognize it or not.

Objectives such as these may have driven us into considering entrepreneurship in the first place:

• I don’t want to move!
• My brother-in-law wants me to work with him.
• I need to make enough money to send our kids to college.
• This looks like something I could do.
• My body hurts too much to keep up my old job.
  

These are all good personal objectives. They may help define what the business is, but they do not define what the business will do. On their own, they will not make you successful.

Business objectives are very different. Once you decide to have a business, you need to set specific business goals. If you don’t have a target, there is no way you will ever hit it! Packaged goods companies start with objectives, but we don’t have to have a big business to use the same, very effective tools.

Objectives are not about how you will do something, but what it is you want to do over the longer term. Take a view of the next 3 to 5 years. Think big.

Here are my objectives for The Entrepreneur’s Friend:

1. Offer support to small business owners and entrepreneurs, giving them tools to increase the likelihood of success in meeting their own goals.
2. Be consistent with my personal values.
3. Generate $[x] in revenue within 5 years.
   

There can and should be multiple targets (or objectives), but there should not be too many of them. Three should be plenty, but some companies need four.  Having too many targets causes us to lose focus. And, that can be a very bad thing.

Try using one of each of these types of objectives, in your order of priority:

• Income or sales. Don’t worry, after you develop a financial plan, you will re-visit the numbers you put here. Start with your best guess – whether pie-in-the-sky or conservative.
• Field, industry, or nature of product/service.
• Character of the business.

Business Objectives for someone else might be:

• Build a plumbing business that: 1) generates a reasonable income for me and any employees, 2) builds a loyal base of repeat customers, and 3) reflects my personal values of respect and responsibility.
• Become a published author who can 1) bring pleasure/knowledge to the lives of others, 2) generate sufficient income to cover future family education costs, and 3) share my spiritual beliefs.
• Build a medical practice that will: 1) provide quality medical services in the field of internal medicine, 2) generate reasonable income [be specific] to doctors and other employees, and 3) devote [x]% of the practice to low-income patients.
• Build a packing and shipping business that will 1) generate $[x] in gross revenue in the next 5 years (particularly relevant for a franchise), 2) provide personal income $[x] or more by the second year, 3) become an integral part of the community.
• Build a data-services business that: 1) generates data service revenue of $[x] within 5 years, 2) is a good corporate citizen, and 3) builds a loyal base of skilled employees.
  

If you work with others in partnership, it is critical that you all agree in writing on these objectives. In that context, the priority is particularly important. For instance, is the primary goal to generate cash now or to build a business by investing in equipment and employees?

Finally, look at your objectives regularly. Written objectives are immensely helpful in keeping us focused as we make day-to-day decisions.

Until we meet again,
The Entrepreneur’s Friend