Why is Goal Setting so Important for Entrepreneurs?

Research shows that New Year resolutions fail.  Why?  Because resolutions aren’t clearly articulated goals.  Annual goal setting is a necessary yet arduous process — particularly for small business owners.  I love everything put out by Michael Hyatt, especially his “Best Year Ever” program.  I went through the 2016 VIP course and have many important takeaways.  Hopefully, sharing some of Michael’s proven methods (with a personal twist) will inspire you to create 2017 goals.

1. Begin with Aspirations and Aim High

The goal setting process is strategic planning at its finest.  Start with a high level aspiration and work down the funnel.

Dream —> Goal —> Action Items

If you want to pay off a business line of credit, that is wonderful.  But it becomes a goal when you define how much debt to pay down in a particular year.  Let’s suppose your credit line is $150,000.  Unless your business has a sudden windfall, it is unlikely you will erase that debt within a single year.  Rather, create a plan and define the terms.  Perhaps you can set the goal to pay down $10,000 by June 30, 2017.  Further decide if you want to make the extra principal payments each month, quarter, or semi-annually. 

By aim high, I mean go outside your comfort zone.  If $5,000 of debt reduction is comfortable, then $10,000 is a stretch but doable (with the proper motivation).  Saying you will pay down $40,000 in 2017 is downright delusional, so don’t go to that extreme either.  Leave your goal at $10,000.  You can always revisit the amount later.

2. Appreciate the Crossover

Many people assume goals are mutually exclusive.  I don’t think this is the case at all; instead, there is a lot of interconnectedness.  If your family and personal relationships are going well, you are probably tending to your physical, financial, and emotional health.  Hopefully, you are feeling alive and enjoying success as a business owner.  If you lack motivation on a fitness goal, it will be more difficult to achieve your business goal. To be most effective, strive for 7 to 10 goals annually across all personal and professional realms of life.

Prioritize.  If your marriage or relationship with children needs the most improvement, make that goal your focal point.  Consider that your “PUSH” goal, or one that makes all other goals possible.  Then structure other goals around it.  If a stronger marriage is your #1 priority, don’t expect to double or triple your business revenue in the same year.  You may increase the bottom line without much additional effort, but save your energy on crucial goals.

3. Articulate and Monitor Your Goals

Nearly everyone will agree that goals are helpful to reaching personal and professional aspirations, yet few actually write them down.  Writing your goals in black and white increases your chances of success.  Once you articulate them, don’t shove them in a drawer to collect dust.  Similar to a business plan, you need to revisit it; pivoting is essential. 

Here’s another practical example.  Let’s say your goal is to increase business income by $20,000 by December 31, 2017.  You set the goal and put it aside until November 2017.  Your year-to-date business income is the same as the prior year.  How on earth are you supposed to raise an additional $20,000 of business income in two months?  Wouldn’t it have been more beneficial to set a goal of $5,000 additional income by March 31 and adjust the goal if you significantly missed the mark?

4. Create Goals that are Measurable and Specific

To evaluate progress, your goal must be specific and measurable.  Following the prior example, let’s say you started too general — to increase business income.  That’s not quantifiable.  Do you want to increase business income by 20% or 50%?  By what date?  If you set the goal for December 31, 2017, consider quarterly “check-ins” to see if you’re still on track.  That leads us into the next point — celebrate the victories.

5. Focus on the Wins, Not the Gap

Transformation doesn’t happen overnight.  Break the goal into small steps.  If you have a total of $50,000 of business debt to eradicate, consider the debt snowball approach.  Pay off your smallest debt balance by the end of February.  Then focus on the next smallest balance by May 31.  If you look at the big gap of $50,000, it is easy to get discouraged.  Setting up smaller incremental goals will keep you motivated throughout the debt payoff process.  

6. Look at Failure as an Opportunity

By stretching outside your comfort zone, there will inevitably come a time when you cannot reach 100% of each goal.  Rather than thinking of yourself as a failure, focus on what you DID accomplish and how you can learn from this experience.  Suppose you want to build additional business cash reserves of $15,000 by June 30 but only get to $12,000.  Look at that!  You got to $12,000, not an easy feat.  Get creative on how to reach the $15,000 goal.  Perhaps you run a summer promotion to make up the shortfall.  Or you set the December 31 goal even higher at $18,000.

Ready to articulate goals for yourself and your business?  Whether you love or dread the goal-setting process, I hope these practical examples inspired you.  If outsourcing your accounting function is high on the list, let’s talk.  Otherwise, see you in January!

Happy holidays,

Deborah Meyer, CPA, CFP(R)