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What Are Business Goals? - Definition & Examples

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  • 0:00 Business Goals
  • 0:15 The Importance Of…
  • 1:30 Pitfalls Of Developing…
  • 2:20 Measuring The Success…
  • 3:30 Business Goals In Action
  • 4:35 Lesson Summary
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Lesson Transcript
Instructor: Paul Mckinney

Paul has been in higher education for 17 years. He has a master's degree and is earning his PhD in Community College Leadership.

Goals are used to help a business grow and achieve its objectives. They can be used to foster teamwork and help the business describe what it wants to accomplish. Setting goals is an important part of any business plan.

Business Goals

Part of the planning process, business goals describe what a company expects to accomplish over a specific period of time. Businesses usually outline their goals and objectives in their business plans. Goals might pertain to the company as a whole, departments, employees, customers, or any other area of the business.

The Importance of Business Goals

Businesses should not fear setting goals because there is absolutely no downside to the process. Goals give a business direction and help measure results. There are four detailed and important reasons why a business should have goals.

1. Measure success - Good organizations should always be trying to improve, grow, and become more efficient. Setting goals provides the clearest way to measure the success of the company.

2. Leadership cohesion - Setting goals ensures that everyone understands what the organization is trying to achieve. When the leadership team clearly understands what the business is trying to accomplish, it provides greater rationale for the decisions management might make regarding hiring, acquisitions, incentives, sales programs, etc.

3. Knowledge is power - If an employee knows and understands the goals, it becomes easier for him or her to make daily decisions based on the long- and short-term goals that were established.

4. Reassess goals - When goals are set, they can be monitored on a regular basis to verify the business is headed in the right direction. If the business is not achieving or moving towards accomplishing its goals, then changes or adjustments need to be made.

Pitfalls of Developing Business Goals

Setting business goals can go wrong if not done correctly. Seasoned business managers put a great deal of time and energy into developing and implementing business goals. There are two big pitfalls a business manager should try to avoid.

1. Setting unrealistically high goals - When a goal is perceived to be unreachable, no effort will be made by the employees to achieve them. A businessperson needs to set realistic goals so that the employees can come together as a team to achieve them.

2. Setting vague and ambiguous goals - Goals that are not specific enough do not lead to action and are useless. If achievements cannot be measured against the businesses expectations, then a manager cannot observe any progress towards the goal.

Measuring the Success of Business Goals

Establishing goals is only half the work in a business plan. Once the goals have been explained to the employees and a plan has been developed to achieve those goals, it is important to review those goals at certain times during the year. A business manager needs to take a 'time-out' every so often and ask himself or herself the following questions:

Is the business on target to achieve our goals?

Is a course direction needed to get the business closer to achieving the goals?

Are the goals still relevant with the ever-changing business world we live in?

Are the employees still focused on helping the business achieve its goals?

The answers to these questions will help management decide if corrective action is needed. For example, if a business is not headed in the right direction, the manager might want to get all the employees together to review what is happening and make changes to help achieve the goals. Whether the management is good or bad, it still needs to keep the employees informed about how the business is performing and how the employees are doing with respect to the goals.

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