How to Set Goals in Small Businesses?

This article provides you a clear understanding and guidelines to set the goals in small businesses and startups by following basic principles.

It will take 2 minutes to read.

Setting the goal is considered as one of the important milestones in the business progress. Unless you set a goal and work towards it, you won’t be serious enough in running businesses. In small businesses, the goal-setting process needs to be simple and efficient.

Entrepreneurs often misunderstanding their financial measurements as a goal. A goal needs to be both motivative as well as actionable. The financial goals are only the output of your operation, and measuring the same will lead you nowhere.

I would like to introduce two kinds of measures in a small business. You must have lead measures/ indicators in place of lag measures.

Lag Measures

Lag measures are something we could measure at the end of the process.

For example,

how many units are sold in a month?

how much profit is earned in a year?

How many viewers are visiting your blog every day?

These measures, If you look at deeply, have no control.

What we can actually control is the small daily actions in business that will assist you in achieving the goals. 

Lag measures are important for understanding the current position, but we need the lead measures to control our actions.

Lead Measures

Lead measures track the critical activities that drive or lead to the lag measure. They predict the success of the lag measure and are influenced directly by the team.

It communicates whether you are on the right path towards success.

It gives you a street-by-street roadmap, running commentary, an alarm, and to be specific, simply measures the heartbeat of your business.

By monitoring the no. of people who wear PPEs in a shop floor (lead measures) we can minimize the no. of accidents (lag measures). 

By measuring the no. of improvements or kaizens made by employees on cost reduction (lead measures) activities, we can minimize the operational expenses (lag measures)

it is up to you to decide what kind of lead measures required for your business. But measuring the performance must add value to the business.

For further reading:

How to Achieve the Goals in Small Business?

2 thoughts on “How to Set Goals in Small Businesses?

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