In order to be successful any business needs to have clear established objectives. This is also important when writing your business plan which is all about specific planning. An effective way to set objectives is to follow the well known acronym SMART that stands for: specific, measurable, achievable, relevant and time-bound.
Using SMART objectives when writing a business plan will help you keep the business plan short, clear and focused on the main goals of the business. Simultaneously, used correctly, they can offer constant benchmarks in evaluating the development of the business.
So what does each of these refer to and how will they help us create a business plan?
Specific – supply information related to specific characteristics of a certain objective. The objective accurately indicates what one wishes to obtain, leaving no room for interpretations.
To verify if an objective is specific or not, use questions such as:
- Who is involved?
- What do we aim to obtain?
- What must be done?
- Where is it made?
- What are the requirements and limitations?
- Why do we have to do this?
It is not mandatory that each objective answers all the aforementioned questions simultaneously. For example, the fact that you aim to increase your turnover can be considered an ambiguous objective because it will not offer the possibility of evaluating this objective. To become specific, the objective should sound something along the lines of: “A 10% turnover growth on the market in 6 months.”
Measurable – it presents quantitative and qualitative aspects of an objective that can be measured using well-known measurements units. An objective that lacks a measurement unit is a football match in which no one is keeping score: everybody wins but nobody knows they’ve won. The numbers are an essential part of a business and by attributing concrete numbers to the objectives you are able to monitor the progress you register and determine how close you are to reach them.
To verify if an objective is measurable or not, use questions such as:
- How much?
- How many?
- When will I know an objective was reached?
For example, “Organizing training sessions for sales people” is a general objective that cannot be evaluated while “Organizing training sessions regarding Time management, Stress management and efficient sales for 60 sales agents” is an objective that allows the permanent monitoring of the registered progress.
Achievable – it means that an objective can truly be achieved with the capacity and available resources. Most times, especially in the case of small businesses, entrepreneurs are overwhelmed with enthusiasm and set unrealistic objectives, whether it’s cost related, time related or managerial capacity related. The risk of setting such goals, beside the negative impact on a potential investor, is to demotivate the entire team involved in the business.
An objective referring to, for example, publishing three new books per week is a tall order for an editorial team that will lead to their demotivation when the objective is not reached. Publishing a new book every couple of weeks may prove a more accurate and accessible objective for the workforce. Moreover, the time for publishing a book is closer to the truth.
Relevant – it means that achieving the objective contributes to the desired impact of the business. Reaching an objective must essentially contribute to set out to accomplish a greater and more general objective. The relevance of the objective should be evaluated in accordance with the general objective. This way, the objective has to take into account a certain impact.
If you aim to take part in three international furniture fairs over a year but you do not have the necessary resources and logistics to export your furniture, this objective may turn out to be an irrelevant and costly objective. In the given context, a relevant objective would refer to your participation at two national furniture fairs a year.
Time-bound – it refers to a well-defined certain time interval, referring to the phase of reaching your objective. Whether you aim to increase your business by 25% or to add 5 new clients to your portfolio, it is mandatory that you follow a certain timeframe.
To determine whether an objective is time-bound or not, use questions such as:
- For how long?
An example of a time-bound objective is “Organizing a training session for your marketing department members during 20-22 December 2014”.