The Importance Of Short Term Goals For Any Business (+ How To Set Them)
When starting a business, the long-term vision and goals are usually the motivating factors behind many decisions. Often entrepreneurs follow a loose plan that overlooks setting smart short-term goals and strategies and leads to burnt-out from looking ahead at seemingly unattainable goals. Short-term planning is often the key to avoiding burnout, discouragement, and harmful business decisions.
Short-term planning also doesn’t 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 plans:
1. Set smart long-term goals. S.M.A.R.T. that is.
Ensuring your long-term plan aligns with your business's overall vision and mission and is attainable and measurable is crucial for avoiding burnout. Additionally, we recommend that your long-term plan include a five and 10-year vision plan and a much more concrete 1-year vision. Don't just include financial goals like profit and margins either, but also add goals like product launches, equipment purchasing, and web traffic.
2. Develop a goal calendar.
We recommend using your business' financial quarters as a timeline for setting and measuring your goals. Once you develop your long-term plan, the first step in setting short-term goals is to break your one-year goals into quarters. Determine what you need to attain every 3 months, and be ready to adjust as needed. Your needs will change as your company evolves, so we recommend staying flexible with your short-term goals.
3. Dig in deep to Q2.
We always recommend working backward when planning to ensure you can actually achieve your goals. This also prevents you from having to adjust up the line when you first set goals for the short term. Starting with Q2, consider everything you 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 backward to determine what you need to accomplish in Q1. Set realistic timelines for your work, determine weekly profit and sales goals, and set marketing priorities to achieve your goals. Then, build out a tracking worksheet to measure everything as you go.
We recommend researching general facts about your industry when setting your goals. That way, you know what you must do to achieve every step of your plan. For example, the typical e-commerce retail conversion rate is 3%. Meaning if your business is doing well, you'll convert 3 of every 100 visitors. Therefore, you probably need to redesign your website if you’re not selling at that conversion rate. And if you are reaching that rate, you can work backward to determine how much site traffic you need. Let's look at a hypothetical example:
Jo's Jam
Pretend our 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. So she needs to sell 100 jars in Q1. If three of every 100 web visitors buy a jar, meaning she needs about 3,333 website visitors to sell 100 jars.
Jo’s 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 she needs about 1,800 from Instagram. The average conversion for Instagram is 1%, so we'll use that. That means she needs to reach 180,000 impressions in Q1 on Instagram. That's about 60k per month or 13.5k per week, far more than most small businesses achieve.
5. Re-evaluate & reduce every goal by 25%.
Finally, return to your plans and reduce your goals by at least 25%. No matter how realistic you think you are, people rarely set attainable goals because entrepreneurs are generally optimists. We all believe in ourselves enough to bet on our business, but our goals aren’t always achievable because of that overconfidence. Setting stretch goals can lead to serious burnout because you’ll have to work harder than you’re capable of to achieve them, whereas you can accomplish more realistic goals with a healthy work/life balance.
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 but already brings in 1,500 on her own. That means she needs 1,000 visitors from Instagram, which means she needs to reach 100,000 reach in three months, 33k per month, and 7.5k per week. This is still a tall order, but it’s more realistic if she reaches at least 10,000 Instagram followers. Therefore, she needs to focus all her efforts on getting that reach by engaging on Instagram daily and uploading 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 the 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 daunting proof that online sales are NOT EASY. It's a numbers game, and knowing this is the KEY to success.
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 to 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.
