What Are SMART Goals and Why Are They Important?

As a business owner, planning for the future can be scary. Every little decision you have to make seems to complicate another. At some point, hopes turn into fears and insecurities, and panic sets in, leading to feelings of being overwhelmed. I know, I’ve been there, in fact, all business owners have. So then, how can you get a handle on all of this? The answer lies in what is known as SMART goals.

SMART goals break down your big plans into manageable steps. SMART goals are concrete targets that your business can strive to achieve over a certain period. These goals should be carefully drafted by a manager and his/her direct report in order to set them up for success.

SMART Goal Definition

SMART is an acronym that stands for Specific, Measurable, Ambitious, Realistic, and Time-Bounded.

Specific

Goals should be specific, clear and easy to understand. “Get more traffic” is too vague to be a helpful goal. To be specific, break down big goals into smaller more specific action steps.

When it comes to teams, being specific may also include the names of the people directly concerned by the goal.

Measurable

You can’t see results without knowing what they look like, which is why SMART goals should also be measurable. As the saying goes: “You get what you measure,” so if you’re not measuring anything, how are you going to know if you accomplished it?

Make sure each step comes with numbers to help you see if you have attained the benchmarks that were set by the goal. The numbers can be absolute such as “Achieve $X in revenue” or relative such as “Increase revenue by X%.”

Ambitious

Many business owners might be tempted to set relatively easy SMART goals, so they can check them off and feel a sense of accomplishment. However, you should be ambitious with your SMART goals. If you want to push a little bit further, you can set stretch goals.

Realistic

A fine balance has to exist between being too easy and being too hard which is where realistic goals come into play. Goals that are too easy will not be enough to really move the needle. Goals that are too ambitious can be frustrating and create a nagging feeling that you’re a failure and weigh you down emotionally. Therefore, your SMART goals need to be challenging, yet doable.

Time-Bounded

Finally, SMART goals must be bounded by time, because without a timeline, you might just keep pushing your goal off to someday. And when you are dealing with today’s crisis, someday never seems to come.

SMART Goal Example

A smart goal would look something like this:

“Steve and July will increase the blog traffic from 8k to 10k visitors per month by December 1st.”

The goal is specific as it identifies who is responsible and deals with traffic and not conversions or something else. It is measurable in the sense that the goal is to increase traffic from 8k to 10k visitors per month. It is ambitious since it represents a 20% increase over a short period. It is realistic to the extent that 20% is an agreed upon increase made by the stakeholders, Steve and July. Finally, it is time-bounded since it should be accomplished by December 1st.

Incremental SMART Goals

When it comes to setting SMART goals, remember that as humans, we generally have a hard time understanding how long things are really going to take. Moreover, if a goal’s time window is too long, most people tend to procrastinate until the last minute. Therefore, it is better to have several incremental deadlines.

We all remember getting that semester-long school assignment to read a specific book and write a 20-page paper on it. While the teacher gave you ample time, if you were like me, you never gave the assignment much thought until close to the end of the semester when the teacher reminded you that it was due in a week. At that point, there was not enough time to read the book and write a decent paper.

Rather than have a SMART goal like: “Steve will write a 20-page book report by the end of the semester”, it would be better to create several incremental SMART goals such as: “Steve will read 25 pages a week and record the key points for the first 10 weeks of the semester.” Then have another SMART goal like: “Steve will spend weeks 11 and 12 writing a rough draft” and so on until the paper is done.

Tight deadlines, while motivating you to perform, can also be really stressful.

Adding Extrinsic Motivations

What many business owners do is to include a commitment device into their SMART goal to create an extrinsic motivation. For example, if your SMART goal is: “Produce one original 1,200 plus word blog post each week by Friday afternoon,” your commitment device may include “…if the blog post is not done by Friday afternoon, you cannot watch your favorite sports team play over the weekend.”

SMART Goals Control Behaviors

However, sometimes extrinsic motivators can make people game the system because the incentive structure is wrong. When it comes to making SMART goals, consider the consequences of the goals to drive behaviors.

I have several friends who went to law school and went on to work at prestigious law firms. Most of them no longer work as lawyers because the firm they worked for had goals about the number of billable hours they had to charge their clients each week. These billable hours goals created so much stress and pressure to bill the client for every little thing that they felt they were being encouraged to overbill the client. As a result, they felt sleazy and unethical, so they simply left the profession.

To avoid creating SMART goals that will encourage people to game the system, make sure your goals encourage the types of behavior you truly want. After you write a draft of your SMART goal, consider the worst behavior you could accidentally encourage. If you feel that your goal may encourage folks to game the system, then consider ways of changing the way you do things or adding a second SMART goal to counter the negative effects of the first one.

For example, to counter the overbilling of a lawyer’s time, employ a system that platforms like Upwork use by capturing screenshots of the user’s screen every few minutes and make them available for review by the client, or add a customer satisfaction SMART goal as part of your billing process.

Team SMART Goals

When it comes to SMART goals for a team, make sure that all the stakeholders are involved in the final wording of the SMART goal. After all, you will want to encourage ownership of the goal and foster collaboration among team members and not competition, that leads one team member to try to sabotage another team member just so they meet their goals, at the expense of other team members.

Do you have a series of SMART goals set up for your business?