Are Your Goals SMART?
The practice of goal setting is a key component of business success. Your business must have strategic and operational goals in order to know where you want your business to go and how you want it to get there.
The goals for you and your business should be SMART:
S = Specific
M = Measurable
A = Attainable
R = Realistic
T = Timely or Time Sensitive
As you look at each goal for your business you should be evaluating if that goal is a SMART goal.
Specific:
Ensure your goals are very specific. What are you going to do, when are you going to do it, and how will it get done.
Measurable:
If a goal can’t be measured, it can’t be managed!
Attainable:
Goals should be a stretch, but within your reach. If you pick a goal that is too unrealistic you will most likely give up on it once you realize your chance of success is slim. However if you pick a goal that is a stretch for you, but still attainable, as you make progress you’ll find yourself becoming more committed to reaching that goal.
Realistic:
Goes hand in hand with attainable. Your goal needs to be realistic to your business, and your own skill set. I’d love to start a software company that puts Microsoft out of business, but that’s probably not very realistic considering I have no experience coding software.
Timely or Time Sensitive:
You need to give yourself a timeline for achieving your goal. It could be next week, next year, next month, or next year but you need a time where you can assesses whether you goal was achieved or not. Without a time limit your sense of urgency to get things done will wane and your chances of attaining your goal will be slim.
Example of a good SMART GOAL:
I’ll use myself and this blog as an example. If I were setting a SMART Goal for this blog it may go something like this:
GOAL:
I will post at least once a day this week, and increase my RSS feeds 10% by Sunday September 13, 2008. This will be accomplished by doing nightly research for post topics, writing at least 1 hour each day, and promoting the blog on blog community sites such as MyBlogLog.com. Also I will be adding a RSS sign up button to the bottom of each post I make encouraging people to sign up. This will help drive traffic to my site and make sponsorships I am offering more valuable, and get more visibility into my consulting services.
- Specific: I am spelling out what I want to achieve, when I want to achieve it, and why.
- Measurable: There are clear metrics. One post per day, and 10% increase in RSS Readers
- Attainable: Writing one post a day is certainly attainable. However I do have a busy weekend planned, so I will need to make sure I have content for Sat/Sun. The 10% gain in RSS is a stretch, but I believe it’s attainable.
- Realistic: I have set as a goal is out of my skill set or so over the top I have no chance at success
- Timely or Time Sensitive: I have a deadline of September 13, 2008
So there you have it, a SMART goal for this blog and hopefully an example that illustrates what SMART goals are about and how they can help your business. I’ll report back on how I did with my SMART goal next week.
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Photo credit: mark lorch
Don’t Be A Loser – Most Businesses Fail, But Yours Won’t!
We’ve all heard the stats on what percentage of businesses fail within a given time frame. Depending on whose research you use, and how the data was compiled, they usually go something like this: 50% – 80% of small businesses fail within the first 1-5 years. The exact percentage and the number of years differ, but the overwhelming reality is that starting a business and staying in business is tough under the best of circumstances.
Conversely when we look up reasons why businesses fail, there is much less gray area. I believe the list below represents the majority of reasons small businesses fail within whatever time frame you choose to look at.
My thought is this, and call me a simpleton if you will, that if we know the top reasons businesses fail wouldn’t it stand to reason that when we are contemplating starting a businesses we should take measures up front to ensure our business does not fall into one of these traps? If I were to tell you that 90% of people who walk over such-and-such bridge plummet to their death, would you walk over that bridge? NO – you would just find another route to get to your destination!
If, during your startup phase, you address each of the issues below, think them through, and create a plan on how your business will avoid these common pitfalls I believe that you are light years ahead of any competition who has yet to go through such an exercise.
So don’t be a loser…a little planning will go a long ways.
1. Lack of direction
2. Impatience
3. Greed
4. Taking action without thinking it through first
5. Poor cost control
6. Poor product quality
7. Bad or nonexistent budgeting
8. Inadequate financial records
9. Loss of momentum in the sales department
10. Failure to anticipate market trends
11. Lack of managerial ability or experience
12. Indecisiveness
13. Bad human relations
14. Diffusion of effort
Did we miss any? Let us know in the comments section.
Startup Cost – What’s it Take to Get Going?
A question I get all the time is, “What’s it cost to get up and running?” And in that phase of startup euphoria usually they don’t even wait for my response before following up with “Well, how much? Huh, give me a number…come on, I got a great idea I need to get on this now!” To which I reply, “It depends”…their face goes blank, they feel they’ve been cheated, what do I mean “it depends”, they just want a number so they can “GO GO GO!!!”
The unfortunate (or fortunate depending on how you look at it) truth is, it really does just depend. It depends on what kind of business you are starting, what your income expectations are from that business, and how (or if) your personal finances are in order. The cost to get going will be much different if you are starting “Fancy, Dancy Micro Chip Factory, LLC” than “Phil’s House of Hot Dogs”
What kind of business are you starting?
The nature of the business will drive much of the initial startup cost. If your business will require heavy machinery, high paid specialist (think Architect), buildings, or loads of inventory (retail) your startup cost are going to be exponentially higher than someone starting a small home based business, or someone providing a service such as consulting, web design, or income tax preparation. The latter is not necessarily better than the former just because it requires less capital up front, but initial expenses (and where that money will come from) should be carefully considered when trying to find the business that’s right for you.
What are your income expectations from the business?
- Is your business going to be producing cash from day one (rare)?
- Will you need some capital reserves to sustain your business, and personal expenses until it starts producing income (more likely)?
- Do you have other sources of income (other job) that will help bridge the gap while you wait for your business to turn a profit?
- When do you expect to see a profit?
- How much profit?
All of the questions above will influence the amount of money you will need in order to get your business up and running. The answers to each will vary depending on your personal situation, the type of business you are running, the market you operate in, and your long-term projections for your business. The general rule of thumb is to have at least 3 months worth of money available to carry you and your business in the beginning.Put it this way, I have never seen a business start with too much money, or have too much money available to them in the startup phase. So three months is definitely the guideline instead of the rule.
Are your personal finances in order?
I’ve seen a lot of businesses fail because the owner’s personal finances are not in order. What could have been a successful venture gets bled dry because the owner expects too much in the way of spendable income from the business than it can sustain in the early phases. The more stable your personal financial situation is the less money you will need during the startup phase. If you will continue working your 9 to 5 job during the startup phase you can afford to have less in capital reserves than if you quit and go full time into the new venture.
Final Words
So you can see we’ve asked about 1,000 questions and have yet to provide a solid number as to what it cost to get going. Feel cheated? We hope not, because as you can see there is a multitude of considerations that will affect the cost associated with getting you up and running.
Photo Credit: daCityDrifter
Is Starting a Business Right For You?
One of the first questions to ask, and the hardest to answer, before starting any business venture is “Is starting a business right for me?” By starting your business after some serious self reflection you’ll be getting off on the right foot and giving your business a chance at success from day one.
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Consider This:
- Do you enjoy making decisions and being in charge?
- Are you willing to take risks and accept the outcome?
- Are you adequately capitalized?
- Are you flexible, and can you adapt to change well?
- Are you good at short and long term planning?
- Do you have strong people skills and build relationships easily?
- Plus many others…
Let’s take a look at these one by one so we can illustrate the importance of each before you jump head first into the deep end of business ownership.
Do you enjoy making decisions and being in charge?
From the first day you decide to go into business you will be the decision maker for your operation. From your business name, to who you will use as a supplier, to whether or not to hire help, these decisions and more you will need to make. Also as your business grows you will continually be accessing and making decisions that could positively or negatively affect the success of your business. When running your own business there is nobody to hand off the tough decisions too or escalate an issue. You will need to be comfortable in this role, and able to act decisively when needed.
Are you willing to take risks and accept the outcome?
The key word here is to accept the outcomes of the risk you take. Many people say they are okay with risk, or that they don’t have a problem taking a risk, but the more important side of that equation is the acceptance of the outcomes those risk involve. If for example you choose to put your life savings into a business venture because you think it’s “worth the risk” then you must be able to accept the outcome of loosing your savings if the business does not perform as you thought it would. I’m not saying you will loose your life savings if you start a business, but even something that has a 90% chance of success still has a 10% chance of failure and you need to be able to accept the downside possibilities.
Are you adequately capitalized?
This isn’t to say you need to be wealthy or rich to start a business, but you will need to have some money. While starting a business on a shoestring is possible, to give your business the best chance for success having some money as reserves is a must. While there are programs to get the money you need to start your business, buy products, and market, some emergency reserves are a good idea in case personal expenses creep into the mix as well. While I can’t tell you exactly how much money is enough (that will depend on the type of business you start and what your personal financial needs are), I can say without a doubt the more the merrier. You will have a little more leeway if you intend to keep working while setting up your business, but if you intend for your business to support you and your family from day one cash reserves are necessary to bridge the gap until your business replaces your earned income. The last thing you need is to be worry about how to pay the mortgage when you should be focusing on building your business, and concentrating on operational efficiency during the startup phase.
Are you good at short and long term planning?
Planning is extremely important when starting a business. You will need to be comfortable planning 1 month, 6 months, 1 year, 5 years, and even 10 years down the road to properly address the needs of your business. The last thing you want to do is start your business without a plan for the future only to see a success idea get blindsided 1 year down the road because you didn’t plan for it.
Do you have strong people skills and build relationships easily?
This many be the most important skill a business owner can posses. All businesses are built around relationships with people…I don’t care what product, or service your business sells, or what market you operate in, your ability to make connections with people and build relationships are the cornerstone to being successful in the long term.
Do yourself a favor, and make sure you think through each of these questions before you make the leap into business ownership.
