4 Reasons You Need to Set Business Goals

1. Measure Success

Good organizations should always be trying to improve, grow, and become more profitable. Setting goals provides the clearest way to measure the success of the company. When you are looking at your company from a three- or five-year perspective, you are looking beyond the tactical side of your business and instead taking a much more macro view, which allows you to see the company from a competitive, business vertical or economic perspective.

2. Leadership Team Cohesion

Setting goals ensures that everyone understands what the prize is and what they are working towards. When your leadership team clearly understands what you are trying to accomplish it provides greater rationale for the decisions you might make regarding hiring, acquisitions, incentives, sales programs, or any other financially-driven decision. This will eliminate a lot of the uncertainty that goes with not understanding the goals of the company.

3. Knowledge Is Power

When your goals have been defined, you can develop a deeper understanding of the effects of tactical decisions and how they play against the strategic goals. For example, when you have a budget that considers revenue to expenses, you will better understand the implications of a major purchase or winning a large new client. I have long believed that information is power and the more you know, the better decisions you can make.

4. Reassess Goals Mid-Year

When you set goals early and continually monitor your business against those goals, you can change course mid-year or when necessary. For example, say you have set your growth revenue goal at 20 percent from the previous year, but midway through the second quarter you find that your financial projections are not tracking like you had expected. You can modify your revenue and expense targets to reflect how your business is trending. If you hadn't set the goals, this type of information is not as apparent and decisive action is more difficult.

SOURCE:inc.com