Smart goals improve success

Smart goals improve success

“Smart” goals improve success

Published in The Tennessean May 19, 2014

By Ed Rappuhn – SCORE Nashville

“I told my employees that more revenue is the major goal for this year. Now sales are up, but profit is down. What gives?”


You didn’t consider the unintended consequences of your goal. Think of the farmer that was losing money on every watermelon he sold. He told his wife, “We need another truck!” He might increase sales but it would only add to his misery.


When you set a goal you should be able to answer these four W’s: What are you trying to accomplish, who is responsible, when should the goal be completed and why are you setting the goal? “SMART” goals are Specific, Measurable, Achievable, Realistic and Time-related. Let’s look at each as related to your business.


Specific. In your goal of increasing revenue, you failed to identify your actual desire to increase profits. Higher sales may or may not increase profits. For example, selling a $30,000 car at a profit of $500 isn’t as good as selling at $20,000 car with a $750 profit margin.


Measureable. How do you know when the goal is reached? Can you imagine the interest in the Super Bowl if no one kept score? When you want to see higher profits, set a percentage or dollar goal.


Achievable. Is it realistic to reach your goal? Consider your resources in terms of time, talent and money. Your goal might be a stretch, but don’t make it impossible; that only leads to frustration.


Relevant. Is your goal leading towards the overall objectives of your business? If you are looking at increased revenue, why is that? It’s possible you are about to sell the business to a buyer concerned only with revenue. Otherwise it’s more likely that you want to see higher profits leading to increased owner’s compensation or more money to put into your business.


Time-related. When is the goal to be completed? Set checkpoints along the way so you can feel a sense of accomplishment or reevaluate your goals or strategies as you move toward the target.


Try this type of goal. ABC Company’s goal is to increase profits by 15% within the next 12 months. Tom and Jane will be responsible for increasing their sales by 15% each while maintaining gross margins. Jill will be responsible for finding 10% reductions in general corporate overhead costs which will more than cover a 20% increase in the marketing budget. Results will be observed and reported monthly.


Make sure the percentage increases (and reductions) are achievable based on the resources you have available. You might even add a carrot such as prizes or bonuses for those that meet or exceed their goals.


With individual responsibilities specifically outlined, and a commitment to increase needed resources, it’s much more likely you will meet your real goals.


Ed Rappuhn is a mentor, workshop facilitator, and the past-chair of SCORE Nashville. SCORE mentors guide entrepreneurs in starting and growing their businesses. Sign up for a free SCORE mentor, find out about our reasonably priced workshops and other services, or volunteer to become a SCORE member at