Entrepreneurs discuss goals, objectives and KPIs and how they use them.
So you’ve read and heard a lot about goals, objectives and KPIs. But what are they? Why are they so important? And how do they differ?
When you first think about starting an online business, it is good to think carefully about how you see your business being different to those that you will compete with. This means you need to consider who you will target, what you will offer to your target market.What is a business goal?
A business goal is simply a broad statement of what you want your business to achieve. Goals should fit with your business’s vision and mission, and integrate with the values of your business. Business goals should be stated in simple terms, be easy to read and understand, and be flexible enough to evolve as the business evolves.What are objectives?
Objectives are much narrower than goals, they define the strategies and implementation steps that you will use to achieve your business goals.
Unlike goals, objectives are precise. Often the acronym applied to objectives are SMART. Meaning, they need to be specific
enough to understand what they are focused on, and must be measurable
. They must also be achievable
– meaning, you need be able to achieve them with the resources you have, and they must be realistic
. Asking a business to grow from zero to five million dollars in the first year may not be realistic. And finally, they must be time oriented – having a timeframe
assigned as to when the objective should be achieved.
At its most fundamental level, objectives outline the who, what, when, where, and why of achieving your general business goals.
Objectives are important and should:
- be short sharp statements of what is going to be achieved, by when and how
- provide the exact steps that your business will take to reach its goals
- include milestones to track your progress.
Objectives not only help you measure your success and progress toward your goals, they provide motivation and a sense of accomplishment to you (the business owner) and your employees.What are Key Performance Indicators (KPIs)?
A key performance indicator is a specific performance measure that will indicate your progress towards and achievement of a particular goal or objective. For example, a KPI might be to sell $5,000 of Product X in the next quarter. You can track your progress each month to see how much of Product X has been sold in that month. A KPI provides a good quantitative measure against which you can monitor achievement of your goals and objectives.
As a result of these considerations, you can then start to formulate your business goals, objectives and key performance indicators.