The Importance Of Short Term Goals For Any Business (+ How To Set Them)
In the midst of starting a business, the long-term vision and goals are usually the motivating factors behind many decisions. But often entrepreneurs that follow a loose, general vision will overlook setting smart short-term goals and strategies and burn out quickly, tired of looking ahead at seemingly unattainable goals. The key to avoid burnout, discouragement, and harmful business decisions is short-term planning.
Short-term planning DOES NOT have to be boring or difficult. In fact, it's just a matter of taking your long-term plan, and breaking it down into digestible, attainable pieces. Here are the steps we use to make our short-term plan:
1. Set smart long-term goals. S.M.A.R.T. that is.
Making sure your long-term plan is not only aligned with your business' overall vision and mission but also attainable and measurable is super important. We recommend that your long-term plan not only includes a 5 and 10 year vision and plan but also a much more concrete 3 and 1 year section as well. Don't just include financial goals like profit, and margins, but also include goals like product launches, equipment purchasing, and web traffic. Need some help with this? Download the FREE Branding Babes Long-Term Planning Guide, and get started NOW!
2. Develop a goal calendar.
We recommend using your business' financial quarters as a timeline for setting and measuring your goals. Once you have a long-term plan developed, the first step in setting short-term goals is breaking your one-year goals down into quarters. Determine what is reasonable for you to attain during each 3 month period, and be ready to adjust as needed. Keep the goals fairly broad still for all of the quarters; next we're going to get into the only specifics you need, Q1 and Q2.
3. Dig in deep to Q2.
We always recommend working backwards when planning to make sure all your goals are attainable, and prevent the need for adjustment all the way up the line when you first set goals for the short term. Starting with Q2, consider all the things you will need to achieve to reach your profit, launch, goals, etc and map them out. You'll want to do this planning so that you know what benchmarks you'll need to achieve by the beginning of Q2.
4. Set Q1 goals and timeliness.
Once you know what you need to do for the starting point of Q2, work backwards to determine what Q1 needs to accomplish. Set realistic timelines for completing work, determine weekly profit and sales goals, and set marketing priorities so that you can get done what you need to accomplish.
Then, build out a tracking worksheet (we use Google sheets) so you can measure everything as you go.
Make sure to do some research, and take into account general facts about your industry. For example, the typical e-commerce retail conversion rate is 3%. This means that if your business is doing well, you'll convert 3 of every 100 visitors. If not, you'll need to work on your website, and sales funnel. And if you are reaching that rate, you can work backwards to determine how much site traffic you need and so on. Let's look at a hypothetical example:
Pretend our co-founder Jo, wants to start a side-hustle selling homemade jam through her online store. She is still testing the waters, and wants to try to turn a profit of $500 in Q1. Each jar sells for $7, and her overhead on each jar is $2 - leaving a profit of $5 (about 70% which is more than the retain average, yay!). So she needs to sell 100 jars in Q1. If 3 of every 100 web visitors buy a jar, that means she needs about 3,333 website visitors to sell 100 jars.
Let's say her only social media outlet right now is Instagram and the rest of her sales come from word of mouth. She thinks she can bring in about 1,500 visitors through word of mouth, so we're going to say she needs 1,800 from IG. The average conversion for IG is 1%, so we'll use that. That means she needs to reach 180,000 people in Q1 on Instagram (not to gain followers - just to gain impressions). That's about 60k per month or 13.5k per week. Maybe Jo ought to lower those goals a little, huh?
5. Re-evaluate & reduce every goal by 25%.
Finally, go back into your plan and reduce your goals by 25%. Seriously. Chop 1/4 of what you wanted to accomplish right off the top, because THINGS HAPPEN. No matter how realistic you are, people almost never set attainable goals because entrepreneurs (despite what they may think about themselves) are ALL optimists. We all believe in ourselves enough to bet on our own business, and likely suffer from at least a little bit of overconfidence (which in this case, is usually a good thing). Since this is an issue across the board, even if you think your goals are realistic, always slim them down so you can not only retain your focus, but actually FEEL GOOD as you reach them. Setting stretch goals can lead to serious burnout because you're likely to be barely reaching them each month, instead of knocking them out of the park.
So we'll take Jo's goal down to 75%. If she wants to sell 75 jars, let's see what she needs to do.
She needs 2,500 site visitors, and already can bring in 1,500 on her own. She needs 1,000 from Instagram then, which means a 100,000 reach, or 33k a month, 7.5k per week. This is still a tall order, but if her social media has about 10k followers she could probably do it. She needs to focus all her efforts therefore, on getting that reach through engaging on IG every day and posting relevant content like stories and posts. She could also do live broadcasts to increase her reach. All of her goals for Q1 will now likely relate to how she can achieve that traffic she needs.
See how this works?
Note: The above example is not only a great illustration of setting short-term goals, but it can be somewhat of daunting proof that online sales is NOT EASY. It's a numbers game, and knowing this is the KEY to success.
In the numbers game of business, short-term planning is EVERYTHING. Short-term numbers are how you reach your long-term vision. It's great to think about top level strategy and dreams, but you're likely to burn out if you don't have attainable steps that you can reach on the way to those lofty goals.
It can seem overwhelming, but running numbers and coming up with goals like this is pretty quick, and as long as you have a solid long-term strategy to guide you, the short term becomes easier.
Need some helping crafting the perfect long-term strategy? Download the FREE Branding Babes Long-Term Planning Guide, and get started NOW!