Establishing Goals

Why establish goals? I’ve heard from colleagues who run other small businesses that they always seem to fall short of any goals they set for the company. There’s almost a feeling of helplessness. Their companies are small and lack the resources needed to turn goals into reality. Some wonder why they should spend time developing a business plan that might help the company make money over the next year or two-especially when they could be working on something else that’s guaranteed to make money today. That’s hard logic to refute, especially in a tight economy. Many small-business owners and entrepreneurs go after the quick buck. Those are the ones that don’t last.

Companies that lack a definite direction and the ability to stay on course eventually sink. It’s the firms with vision and a plan to exploit that vision that become the stars. If you don’t set goals and then try to reach them, it’s guaranteed that your firm will stay right where it is today. With changing technology, changing customer demands, and increasing sophistication, marching in place is business suicide. During the 1990s and as we approach the next century, no company has the luxury of conducting business as usual. If you stay where you are today, the rest of us will leave you in the dust.

Company Goals
These are the targets for change and transition that your firm must reach over the planning horizon-for our purposes, the next twelve months. Company goals cover such major issues as

# Products offered
# Customers targeted
# Company image
# Competition
# Levels of service
# Product quality

Companywide goals established in the business plan move the company into the position where it needs to be.

Department Goals
At very small companies, often that’s for one person. No matter. Design department goals to connect with specific requirements of both the overall company goals and the goals of other departments in terms of product and timing. We make department goals in order to

# Assist other departments that depend on those specific results
# Achieve the overall company goals

A good example would be in the area of finance. Say the firm needs additional funds to buy the machinery needed to expand its manufacturing operation. This will generate the sales revenue needed to meet overall profit targets. Here are examples of specific department goals:

# Get additional funds.
# Purchase and take delivery of new machinery.
# Expand manufacturing.
# Generate added sales.
# Help attain the overall profit objectives.

Failure to reach of any one of these department goals could jeopardize reaching the overall company’s target. Additionally, within every department, it’s easy to identify exactly what that department must do to further the company’s cause.

APPRAISING YOUR CURRENT POSITION
The question here, however, is why do this? After all, most managers of small businesses are close enough to their everyday operation to know where they are, aren’t they? Not necessarily. At least few take the time to think about where they are, then write it down so that others can judge its accuracy. We’re talking about things like

# Market position
# Company strengths and weaknesses
# Reputation
# Industry viability
# Technology
# Product line
# Adequacy of capital
# Capability and sufficiency of employees
# Sufficiency of plant, machinery, and equipment (the infrastructure)

Often the hardest part of starting a business plan is honestly determining your current position today. It’s not always so obvious. Take the case of Domino’s Pizza Corporation. What business is it in? Of course, it sells pizza. So does every one of its competitors. The Domino’s planners decided that differentiating Domino’s product based on higher quality was too hard a sell. Besides, it wasn’t necessary. So what business is Domino’s really in? The convenience industry. Its pizza isn’t any better or worse than most of the competition. However, the niche Domino’s chose for itself in its plan was the business of selling convenience. For a while it had that entire market to itself. Another example is that of a payroll processing service. Its current position is that of providing financial convenience to its clients. The company performs a task that other companies would rather not do. While assessing the current position, someone came up with the bright idea of expanding the services offered. After all, financial convenience extends beyond simply doing the payroll. Why not add bookkeeping, tracking and collecting receivables, and personnel consulting? See how the planning process not only answers a lot of questions you may not have thought about for some time, but prompts questions that may turn into opportunities? That’s the kind of penetrating thought that goes into assessing your firm’s current position.

Source Adams - All-In-One Business Planner
How to Create the Plan You Need To
Build Your Business. by Christopher R. Malburg, CPA, MBA