The ability to set correct goals is critical for failing businesses. In a business turnaround, you need one thing – clarity. Goals (when done correctly) are one of the best ways for you to achieve clarity.
I bet I know what you’re thinking…
“I already know how to set goals. I’ve been on the training course, I’ve read the books.”
Well, hold on now.
Did you know there are different types of goals and there are correct and incorrect ways to set them?
Did you know that one of the reasons why there are so many failing businesses in the UK (and worldwide) is a lack of goals or unclear goals?
Why Failing Businesses Need Goals
As I said above, goals bring clarity – when done properly. You would be surprised at how often I have to teach this to Directors and senior leadership teams – especially in a business turnaround.
Quite often, there is an awareness around goal-setting however they don’t actually implement goal-setting as part of the embedded business culture. That’s the equivalent of having an awareness that you should eat healthily and exercise. But who’s fault is it when you’re overweight?
Having an awareness or knowledge wasn’t enough. You have to apply the knowledge in order to get the results.
Not having goals (especially in a failing business) is dangerous.
When you have well-crafted goals, everyone understands them and they are easier to achieve.
There is countless research which says that if you actually write a goal down, then you are more likely to achieve it.
Doesn’t that sound like something your business needs?
How To Set Goals – Identify The ‘Wildly Important Goals’
I’ve read many books on goal-setting and by far my favourite methodology comes from the book, “The 4 Disciplines of Execution: Achieving Your Wildly Important Goals” from the Franklin Covey Institute. In a business turnaround, you need to ensure that you’re not setting just any goals – but the right goals.
In this book, the authors talk about firstly identifying the Wildly Important Goals (WIGS).
If you’re trying to save your failing business, most likely, you will have 1,000 things you need to try and fix.
The problem is, you can’t fix everything at once. If you try, you’re going to eventually drop an important ball and you’ll get burned out.
The first thing to do is to take a step back.
Look at the 1,000 things that need sorting and ask this question…
“What are the 1-3 things that, if fixed, will add the most value? What are the most important things right now?”
This is what the book calls the ‘Wildly Important Goals’.
Not all goals are created equal.
Some of them are ‘wildly important.’
When you ask this question, you get a new perspective. You start attacking high-value activities. These are the important things. These are the things that will achieve massive savings on your bottom line or help you increase the revenue.
So stop. Take a breath. Look at all the things that need fixing and force yourself to pick the few highest-value items on that list.
How To Set Goals – The Goal-Setting Formula
The authors of ‘The 4 Disciplines of Execution’, have created a simple yet powerful goal-setting formula.
Move [X] to [Y] by [WHEN]
Told you it was simple. Now let’s break it down.
The first word must always ‘move’ something. This has to be a verb. Remember, a verb is a ‘doing’ word. Goals should have movement of something.
Examples of this could be:
- Obtain etc
Start with a verb.
This is your starting point. You’d be surprised how many senior people don’t know the numbers in their business (even in a business turnaround). What’s your expense base? What’s your human capital costs? What’s your average EBIT for the year? What’s your customer closure rate? What’s your average number of returns per month? What’s your average carriage costs per month?
Do you get the point?
If you’re trying to improve something, then you need to know what your starting point is.
If you were losing weight, wouldn’t you want to know your starting weight so you can track and measure how many pounds you lose? It’s the exact same principle.
Get your starting point.
This is the goal. This is where you want to get to. Whatever your wildly important goal is, this is what you are trying to achieve. This needs to be sensible, reasonable and achievable.
Don’t get in the habit of setting unrealistic or unachievable goals. That doesn’t serve anybody well. You’re setting yourself up to fail from the start. You don’t want that.
Agree with your team what the goal is.
If a goal doesn’t have a deadline then you are wasting time!
Deadlines ensure there is sufficient movement. People work towards a deadline.
Set clear deadlines.
Examples of Good Goals For A Failing Business
Here are some examples of some goals using the above formula.
- Decrease human capital costs from £200K to £150K by 31st September 2020.
- Increase gross profit margin from 32% to 36% by the end of quarter 3.
- Increase EBITDA from £20K per month to £35K per month by Feb 2021
- Increase suppliers from 10 to 15 by the end of the financial year.
- Reduce return-rate from 9% to 5% by 30th June 2020.
Do you get the idea?
- Identify your wildly important goals (choose 3-5 to start with)
- Using the formula, “Move [X] to [Y] by [WHEN]”, craft a goal for each one.
- Get to work