Short and long-term goals and KPIs
Setting goals and key performance indicators (KPIs) during the start-up and growth phases will help you assess how effectively your business operates and measure your success. If a business has no goals or targets in place, it has the potential to lose direction or even decline.
Understanding goals and KPIs
As a business owner, you need to understand the strategies and process for setting, implementing and reviewing goals and KPIs.
Learn about the types of business objectives used to measure your performance below.
A short-term goal is something you want to achieve relatively soon, ranging from small and achievable daily, weekly, monthly and yearly goals.
In business planning, this is often set as July–June of the financial year or a business quarter, to coincide with financial planning for the business cycle.
These are goals you want to achieve several years into the business's future. A realistic goal is generally 2–5 years; a longer period may be considered more visionary.
Long-term goals require more strategic planning and time, and they can also be segmented into short-term goals or stages to help achieve them.
KPIs are a measured value showing how effective the business is evaluating the business performance towards key targets.
Goals and KPIs need to be achievable, relevant and able to move with changes to market or business performance.
Milestones are important accomplishments needed to achieve a goal. These are specific tasks set along the timeline of the goal to track and measure progress.
For example, your business goal might be to increase the products on offer, so a milestone could be:
- signing a contract with a supplier for the new product range to be sold
- obtaining a loan from the bank to purchase equipment needed to manufacture a new product.
Setting short and long-term goals
Goal setting provides a focus for the business to achieve a plan and a direction for growth.
Goals help to:
- establish what your business will need to achieve within a financial or calendar year
- define growth and the direction of your business in the short and long term
- keep up with your competitors
- clearly explain expectations to staff
- manage your time and stress by setting realistic and achievable expectations.
Setting goals can range from operational and financial business goals to team and individual staff goals, and it is an effective way to encourage teamwork and team bonding.
Examples include:
- setting up business social media pages
- introducing takeaway at your restaurant
- repurposing a piece of equipment
- recruiting another staff member
- changing your current supplies to more sustainable alternatives (e.g. disposable waste to compostable)
- a marketing campaign for Christmas.
Examples include:
- opening additional stores in 3 new locations
- exporting to international markets
- introducing gluten-free and vegan products to your range
- purchase a large and expensive piece of equipment to manufacture a new product faster
- changing all energy sources to renewable technologies
- adding a senior manager to free you up to work on business growth
- winning a large grant or tender.
Set SMART goals
When establishing goals, each one should be SMART—this is an acronym for ensuring each goal is:
- Specific
- Measurable
- Achievable
- Relevant
- Time dependent.
A SMART goal can be written in a way that covers all its components.
You will train your 3 staff in selling techniques (specific) so they will sell at least 90% of the Mother's Day gift range (measurable).
It will be delivered by the Sell Well Company who specialise in retail gift selling (achievable and relevant) in March on a Monday morning from 9am–12pm (time dependent).
You will lease a warehouse in Townsville (specific) for under $80,000 per year (measurable) using investment from you and two partners (achievable) to have sufficient space for the manufacture and storage of cabinets for new kitchens (relevant) by end of 2024 (time dependent).
Implementing goals with clear actions
Along with setting goals, you need to have actionable plans that are achievable.
When implementing goals, it is important to:
- communicate the goals with staff and business advisers
- know and understand your risks
- identify any barriers or complications
- prepare resources you may need
- have strategies and processes in place
- document timelines for when each goal should be achieved
- schedule your milestones
- assess them against your competitors
- prioritise and assign tasks
- regularly review progress
- confirm that they have been met on the due date and review and reschedule if not.
Implementing goals might need to be done in stages depending on the outcome you want to achieve, and you should use small goals to contribute to long term goals.
Setting and implementing KPIs
By setting KPIs, you and your staff will know when you have achieved steps along the way to fulfilling your goals.
Your business plan and marketing plan need KPIs to measure how you are achieving performance targets or goals over time.
When setting the KPIs, determine how you will know you have achieved each step. Since KPIs are the key identifiers of progress, this may be as simple as regularly reporting (daily, weekly or monthly) on the KPI metric, or using a checklist to track achievements.
- A sales target needed to be reached each week to achieve a net profit goal for the month
- The number of customers returning each month, to indicate customer satisfaction and loyalty
- The number of referrals each month, to reduce new customer marketing budget
- The number of calls after a radio ad campaign
- The number of customers attending a workshop or program
- The percentage of returns and complaints over each quarter
- The conversion rate for a social marketing campaign
- The number of cold calls made each day
- Milestones reached on time
- The current or quick financial ratios
- Equipment breakdowns per quarter
- Staff using new process or procedures
Review your goals
Reviewing and keeping track of goals is integral to achieving them and should be done:
- once a goal has been achieved
- when a milestone has been reached
- if a goal has not been achieved by a milestone
- if the goal likely will not be accomplished.
Knowing the status of your objectives will keep goals on track or allow you time to modify them to become achievable again.
Working with mentors and advisers can help you review and set new goals.
Review KPIs
Monitoring KPIs should be done regularly depending on your business needs (daily, weekly, monthly, quarterly and yearly) because they are indicators of how your business is performing or progressing towards your goals.
Goals should be recorded in your business and marketing plans, which could include:
- improving your processes to reduce defects and returns
- improving your social media and other advertising channels
- sales promotions to reduce your levels of older stock
- staff training to achieve consistent levels of formal qualifications
- improving and updating software and digital tools—take our digital health check.
Also, review KPIs as part of staff performance reviews, but make sure to keep accurate records and documents.
Collaborating with staff, business mentors and advisers can help you identify the KPIs needed to achieve your goals.