You’ve identified your strengths and weaknesses, assessed the prospects for success in your line of business, developed a clearly defined mission statement, have a realistic projection on the future direction of your business, and possibly secured initial seed money from family and friends who are quite interested in supporting your entrepreneurial spirit. What’s next? Now your attention will focus on business goals, objectives, and strategies. For clarification purposes, let us first define these terms.
A goal is a measurable outcome of progress over a reasonable time period. Ideally, it is a measurement of positive activity within a segment of time. An objective relates to how a goal is performed, and a strategy is a way in which that goal will be accomplished. Let’s look at a rather simple example to show how they work together.
A goal in school might be to complete 60 credit hours in a span of 3 quarters in college with a grade point average of 3.8. Here, the goal is the final grade point average. The objective is to complete 60 credit hours. The strategy takes into consideration class schedule. “Am I going to take 3 classes worth 5 credit hours per quarter?” Obviously this will not help me reach my goal since there are only 3 quarters in a calendar school year (not including summer). Clearly, I will have to enroll for at least 20 credit hours for each of the 3 quarters if I’m going to reach my goal. No doubt, this would entail a heavy course load.
As part of my strategy, “How many hours will I devote to the library?” Keep in mind that the goal should impact the strategy. Additional questions would include, “What types of classes will I take? Are some of my classes going to be independent study, which allows me to complete assignments at my own pace according to a given schedule without actually spending time in a classroom setting?” Strategic initiatives may mean that some classes are pass/fail. A passing grade will not affect my overall grade point average; however, it will afford me the opportunity to earn the allotted credit hours for that particular class. I may take 15 credit hours for a grade, and the other 5 credit hours will be independent study pass/fail classes. In this example, a clear strategy must be developed to reach the goal – a 3.8 grade point average.
From an entrepreneur’s perspective, goals must be specific, quantifiable, and time-based. Make sure you set concrete and clear goals. For example, perhaps you want to secure on average 5 customers/clients each month in your first year. Next, how will you objectively measure each goal?
What metric or measurement will you use to gauge the success rate for every customer/client secured? A rule of thumb you might use is 5 customers/clients out of 20 prospects. This would give you a 20% success rate (5/20 = .20 or 20%). Lastly, your goals and objectives must be time-based. When will your goals be achieved? You may plan to have 5 customers/clients per month, but quite possibly, it could take two months to accomplish this. This could very well be the case initially, particularly in a slow economy.
When it comes to strategies, they are the rules and guidelines by which your goals and objectives will be achieved. Here are some considerations that you may face in this area:
Product / Services
What cost components are involved per unit/client? What are the total costs?
What are the key benefits or features?
Raising Capital / Money
Make a list of family members and friends who could possibly invest in your business. (And yes, they will ask to see your business plan? I know I would! Great ideas are nothing unless they are written down for others to see.)
Identify grants, small business loans, angel investors, or venture capital opportunities and see what is required to secure them. (Venture capital is a fund raising technique for companies willing to give up equity or future profits in return for money to grow the business.)
Marketing / Advertising
How will you market or advertise your products/services? The internet? Your website? Word of mouth from repeat customers, family, friends, and colleagues? How much will it cost to advertise through these channels?
Who will be your suppliers? How will you find them?
You are almost ready to begin your entrepreneurial journey. But wait, there’s more. Small business attorney Michael Anthony will share some very important insights next week on a wide range of legal issues before getting started (and staying!) in business. Stay tuned.