The Three KPIs That Every Business Should Track
Discover for yourself whether you’re tracking the three most important KPIs. And if not, learn how to start doing so.
The only way for a business owner to know if their company is meeting its goals is to define and track key performance indicators. However, the first part may be trickier than the second.
How do you even come up with the right KPIs to track?
Know that there are two groups of KPIs that every business should track: industry-specific KPIs and universal KPIs.
This article is about universal KPIs that are essential for every business.
Profit Margin
The gross profit margin is one of the most critical KPIs. After all, the profit motive drives most businesses since there's no business if there’s no profit.
But some companies make the mistake of spending way more than they earn. While this is okay in some stages of a business, it can spell troubles in the long run.
That’s why it’s important to keep an eye on your gross profit margin. Here’s how to calculate it:
Divide the gross profit by gross sales. The number you get is the fractional profit margin, which you can multiply by 100 to express in percentage.
If your profit margin is going up, that’s great! But if it’s lower compared to the same quarter of last year, maybe it’s time to make a change.
There are two ways to increase your company’s profit market, and they have to do with the gross profit formula: gross sales minus cost of goods sold (COGS). So you can either decrease COGS or increase sales (at constant or a smaller increase in COGS).
You can accomplish the former by cutting costs and saving money on suppliers, utilities, and such. As for the latter, you can improve your products or services so you can raise prices.
Revenue Ratio
How can you tell if your business is going in the right direction?
Your revenue ratio is a good way to measure your company’s growth in a particular period.
The revenue ratio is the ratio of the current period’s revenue compared to the same period of the year before. It shows how fast your revenue is growing, and the best way to increase this ratio is to increase sales or revenue.
If the revenue ratio is higher than 1.0, your revenue is growing. The higher it is, the faster your company’s revenue growth.
Conversion Rate
The Internet has enabled business owners to track conversion rates more precisely than ever. If you’re spending money on ads, for example, it’s essential to find out which ads work and which ones do not.
It’s also possible to calculate the conversion rate for anything, not just paid ads. It could be the percentage of people who clicked on your link or bought your product, for instance. To do so, calculate the conversion rate by dividing the number of conversions by the total number of leads (those who saw your ad, for example).
Conversion rates give powerful insights and can help optimise or fix things.
Track Everything
The most critical KPIs may depend on your business. Among others, you might want to track your profit margin and revenue ratio.
In the digital world of today, it may also interest you to monitor specific conversion rates.
Tracking these KPIs will let you know the state of your business so you can come up with ways to make it even more profitable.
What to Know Before Seeking Investor Financing
Interested in bringing someone else on board in your business? Finding the right funding source differs based on where you are with your business.
Seeking an investor isn’t as easy as asking for money to fund your highly promising business idea. It takes serious work, preparation, and patience.
Chances are, you won’t even find the right fit in your first meeting.
But before you get to that meeting, here are some things you should know beforehand.
#1. How Much Are You Willing to Give Up?
Some investors only do equity deals. If that’s the case, you have to do two things:
- Get your company valuated
- Decide how much you’re willing to give up for the money needed
This may not always be the case with small businesses, but it’s worth preparing for.
#2. The Three Types of Investors
So you’ve decided that the banks aren’t an option. There are three types of investors you can turn to.
Angel Investors
These are often wealthy individuals most interested in early-stage businesses.
Angel investors almost always seek to invest in exchange for a portion of the business. In addition, some may also be willing to contribute their expertise.
Venture Capital
Venture capital is an enterprise endeavour, so you’re going to need a VC firm if you want to raise more than one million.
While it’s a popular fundraising method for high-growth businesses, it’s not ideal for small companies that don’t hold potential for outsized returns.
Crowdfunding
Crowdfunding is an interesting alternative that’s relatively fresh on the scene (at least compared to the first two). Although it heavily favours the B2C space, certain B2B niches are not completely out of the question.
A crowdfunded venture usually doesn’t come with too many strings attached, such as a share of the company. It is, however, harder to get a service delivery industry crowdfunded.
#3. Investor Expectations
You must have a killer business plan before you even think of approaching an investor.
People need assurances before they part with their money. So your comprehensive business plan must outline everything that you do.
Include realistic projections and use numbers to back up your claims. One of the most important concerns for any investor is how and when they’re going to get their money back, including the potential returns.
Some investors only put their money in niches they’re familiar with. All of this only means that you have to do your research before going into a meeting.
#4. Audit Your Finances
Are you sure that you need external funding? Some business owners jump the gun when they don’t have to.
To begin with, you can work on improving your profitability and cash flow. Audit your finances to see where you’re bleeding too much money and what you can do to fix it.
Investor funding comes with strings attached, so any business owners or entrepreneurs should only go down this route when absolutely necessary.
Seeking Investments Is About More Than Cost and Convenience
Requesting investor funding is one of the biggest decisions you can make. It can be great for your growth and turnaround, but it can also result in losing control and even the business.
Make sure that you have all your facts before making a move and that you’re seeking investment for a very valid reason.
That’s how you can increase the chance of bringing the right investor on board.
7 Useful Finance Tips for Small Businesses
Good financial health is crucial for any business, and this starts with careful financial management. However, many small business owners feel overwhelmed and continue to put off the task of dealing with their finances. Tempting though it is, this approach won’t set your business in good stead for the future. Good financial management always pays off, so follow these useful tips to strengthen your small business. It’s important to take charge of your finances today in order to ensure the financial health of your company for years to come.
1. Get to Grips with Financial Statements
Effective money management starts with your financial statements. These are written records of your business performance and financial activity. Maintaining awareness of your business's financial status enables you to make smart decisions and identify any potential problems ahead of time. Here are the most important types of financial statements you need to know about:
- Cash flow statements show how much cash is coming in and out of your company. These reports help you to understand your cash position and identify any issues that need to be addressed.
- Balance sheets are an assessment of your net worth that detail your assets, liabilities, and equity.
- An income statement is a complete picture of your business’ income and expenditures, which is essential to understand whether you’re making a profit or a loss.
2. Create a Tax Plan
Understanding taxes is vital for the financial health of your business. Legally, your taxes must be submitted on time and your statements must be 100% accurate. This sounds daunting, but it’s easy with due diligence.
Careful planning can also help you to decrease your taxes through deductions, and these savings will grow along with your business. If you feel overwhelmed, it’s worth considering whether hiring an accountant could generate a significant return on investment for your small business.
3. Keep a Separate Business Account
The sooner you separate your personal and business bank accounts, the better. Mixing the two can lead to confusion and tax trouble. Opening a business account will help keep your finances transparent and save a lot of time and stress later on. It’s also worth looking into a high-interest business savings account, which can be used to generate equity to invest further down the line. It really does pay to plan for the future.
4. Pay Yourself
Business owners often skip this step during the early days, but it’s important to start as you mean to go on. As the owner, it’s essential for you to maintain good personal finances to avoid ending up in trouble later on.
5. Cloud-Based Accounting Software
We live in the Digital Age, so use this to your advantage and harness the power of technology to streamline your business practices. Accounting is notoriously time-consuming but cloud-based software is a cost-effective solution that can save you many person-hours. You’ll be able to access your accounts 24/7 from any device, allowing you to manage your finances remotely for convenience and peace of mind. This type of software also reduces errors to ensure that your data stays accurate.
6. Measure Performance
Keeping a close eye on performance is essential for the success of any business, so create a regular time slot to do just that. Closely examining your expenditures and return on investment (ROI) allows you to make informed choices as you grow your business. You’ll be able to cut down on costs that provide little value to your business and focus on increasing your ROIs.
7. Prepare for Audits
You need to figure out which audits your business may receive so that you can adequately prepare for them. It’s always wise to maintain accurate financial records to ensure that you’re ready for any audit you may face. Learning about different types of audits and the associated selection process can often help you to avoid them, so this really pays off.
Summary
Employing these finance tips from the word “go” can help your small business grow and thrive. Whilst it may be tempting to cut corners, it’s important to see the bigger picture and think about the long-term financial health of your business. Adopting good habits early in the game is key to your success.
Why Every Entrepreneur Should Have a Mentor
Entrepreneurs could use a mentor at any and every stage of their career. Discover why having a good one can be so important.
Successful entrepreneurs have something in common:
A good number of them have had mentors throughout their careers.
Fortunately, it’s not something reserved for novice entrepreneurs. Even experienced entrepreneurs can say that they’ve had a mentor at least once in their lives.
After all, someone has always been there and done that, someone who has faced the same challenges and came away better. And everyone can learn from such people.
Convinced yet? Find out why a mentor might really help you as an entrepreneur.
There are Things You Can’t Learn From Books.
People who have been in a business for a while have something precious - their experience. That’s why a good mentor can teach you things that you can’t learn elsewhere.
Business books may be great, but they don’t always have a ready solution to your real-life problems.
Ideally, you should find an accomplished mentor who has a lot of experience, even if it means they’ve had to fail many times. After all, failure is a great teacher, and you can learn from other’s mistakes and avoid committing the same.
Remember that entrepreneurs don’t have bosses. They don’t have anyone to tell them what to do, which is often great. However, even entrepreneurs may need guidance at times. And that’s what great mentors can offer.
They Push You to Go an Extra Mile
Everything seems scary for someone who starts a business. And if your friends aren’t entrepreneurs, you may not have anyone with whom you can talk. Sometimes even your family won’t be supportive and may even warn that what you’re doing is risky.
New business owners are often apprehensive and don’t realise how capable they are. That’s why they need a mentor who can be there to help them get up when they get knocked down. That mentor can also support you and push you to go the extra mile.
A good mentor can see your potential even when you don’t and help you bring forth and develop it to the fullest.
Expanding Your Network
Someone who’s been in business for a while has a reliable network of people. They always know where to turn for advice or help. They know experts in a variety of fields, which makes solving problems much easier.
When you’re making a start, the best way to grow your network is to leverage someone else’s network. Their contacts also become yours, and it may just give you an expedient advantage over the competition.
The more extensive your network, the more opportunities may be in store. Sometimes the best business partnerships come from places you least expect.
Find Your Mentor
Your business mentor doesn’t even have to be from the same industry. After all, entrepreneurship is littered with challenges, and many of them are not industry-specific.
Your potential mentors may know a lot about business and how it works in ways that transcend individual industries.
In addition, it can be a good idea to have several mentors, perhaps even one in every area that interests you want to develop. It’s like having your personal board of advisors!
And who wouldn’t want that?
How to Create a Realistic Business Budget
Your business needs a budget, but it can be tempting to skip this step when you're starting. That would be a mistake because a budget is a powerful tool to ensure the financial health of your small business. A realistic budget enables you to make confident financial decisions and save money for future investment and expansion. On top of this, your budget will prevent you from overspending and provide concrete goals against which you can measure your success.
It can be difficult to know where to start when creating a budget, particularly during your first year in business. You’ll need to work with estimates if this is the case, but it will still make financial planning much easier. Once you’ve laid out a realistic budget, you’ll be able to adjust it as necessary rather than starting from scratch. Here are six easy steps to creating a realistic budget for your business.
1. Calculate Your Income
Business income is the money you receive from customers for your goods or services. This is easy to work out from your records if you’ve been in business for a while, but if you’re starting, you’ll need to make an estimate. Try to be as realistic as possible, but always err on the side of caution if in doubt. It’s better to be conservative with your budget than risk overspending.
If you’ve been in business for a year or more, take some time to analyze seasonal trends. If you’re new, do some research on patterns within your industry. Many businesses experience a boom in sales at Christmas, followed by a lull in January. It’s important to plan for these peaks and troughs as accurately as you can.
2. Determine Your Costs
Once you’ve worked out your projected income, it’s time to take a look at your expenses. Business costs fall into three different categories: fixed, semi-variable, and variable.
Fixed: these costs are the easiest ones to calculate. Fixed costs are the expenses that are likely to remain the same for the next year or so, such as rent, internet, and insurance.
Semi-variable: this is a bit of a grey area. Semi-variable costs are fixed costs that may increase or decrease in proportion to your workload. For example, a boom in sales might result in increased hires, phone bills, or power usage.
Variables: these expenses are directly linked to your number of sales, such as commissions or raw materials. This is the part of your budget that you’re most likely to have to tweak over time. You can calculate this by adding all of your variable costs over a given period of time and then dividing them by your production volume.
3. Factor in One-Off Expenses
You need some wiggle room in your budget in case things go wrong. Unforeseen expenses do crop up now and then, so you need to be ready for them. For example, if a piece of equipment breaks down, you’ll need to replace it as soon as possible so that it doesn’t impede productivity. Of course, some one-off expenses are planned, such as facility upgrades or conferences. Keep a separate fund for this type of cost, and don’t be tempted to put it towards your regular expenses.
4. Work Out Your Profit
Your profit represents how much money you’re actually making. You could have a huge income, but that doesn’t mean much if even higher costs outweigh it. To calculate your profit, subtract your costs from your income.
5. Refresh
A budget doesn’t mean much if you don’t review it regularly, and a lot can change in a surprisingly short amount of time. It’s vital to keep checking your budget and making adjustments whenever necessary. Each month, set aside some time to check your finances and compare them against your plan. This will keep you on track and allow you to keep your budget relevant to your business.
6. Use Bookkeeping Tools
Staying on top of your budget can be time-consuming, especially when your business grows and you’ve got a million other things to do. Cloud-based bookkeeping software is the easiest and most reliable way to keep track of your expenses, and you’ll have 24/7 access to your records from anywhere in the world, so long as there’s an internet connection.
The Importance of Budgeting
A realistic budget for your business makes it so much easier to plan for the future. However, regularly reviewing and adjusting your budget is essential, or it could quickly become outdated. Your budget is a roadmap for your business, and it helps you prepare for all manner of situations. Most importantly, it gives you control over your finances, which will help your business survive and flourish.
7 Reasons to Use Online Accounting Software
The days of pencils and paper are over. Almost everything is done online now, and accounting is no exception. Online accounting software has several benefits for your business, and you should set it up as soon as possible to set yourself in good stead for financial success. Many people debate the benefits of accounting software vs. human accountants, but it’s actually helpful to use both. Here’s how online accounting software can benefit your business.
1. It’s Easy to Use
One of the biggest benefits of online accounting software is that it’s easy to learn and use. You don’t have to develop an organisational system yourself, and you can keep your accounts up to date by making a few regular entries. Make a habit of entering your bank statements, expenses, and invoices, and the rest will be taken care of.
2. It’s Cost-Effective
Accounting software saves a lot of time, and as the saying goes, time is money. Online software allows both you and your human accountant to access and review your accountants simultaneously, saving a significant amount of back-and-forth communication. What’s more, this type of software is generally billed monthly, so you know exactly how much you’ll have to pay and when. Regularly paying a smaller fee is a lot more beneficial for cash flow than shelling out a large lump sum.
3. Seamless Invoicing
Invoicing errors can be costly, but sometimes it isn’t easy to keep track of everything at once. Accounting software allows you to stay on top of your invoices and remain aware of who owes what and when. You can even opt to be alerted when invoices are overdue, allowing you to take care of any problems quickly and efficiently.
4. Cash Flow Projections
Managing your cash flow well is essential to the financial health of your business; in fact, some would argue that cash flow is even more important than profit. Online accounting software creates forecasts for profits, losses, and cash flow, which can help you make informed financial decisions and prevent any nasty surprises. Cash flow problems can be really damaging or even fatal to your business, so these projections are incredibly valuable for effective money management.
5. Productivity
Paperwork and productivity don’t always go together. If you and your employees are consumed with dull paperwork, you’re more likely to lose motivation and get distracted. Online accounting software dramatically reduces paperwork through automated processes, which cuts down on person-hours and allows you to use your time and effort better.
6. Accuracy
Human error is the leading cause of accounting mistakes. Miscalculations often lead to wasted time, a lot of stress, and significant expense. By automating calculations and accounting processes, online software can help you avoid costly mistakes and ensure that your data is accurate. In turn, this enables your human accountant to provide valuable insights into how to practice smarter spending and improve the financial health of your business.
7. Flexibility
Freedom and flexibility are often cited as key reasons people start their own businesses, so you want accounting software to help you reach that goal. Online accounting software allows you to manage your accounts from anywhere in the world, so long as you have an internet connection. It also gives your accountant far easier access to your information, allowing you to consult virtually rather than face-to-face. Online accounting software allows you to stay on top of your accounts at all times, giving you far greater flexibility and freedom.
Summary
Online accounting software has a myriad of benefits for the financial health of your business. This software saves time, money, and stress and allows businesses to operate with more flexibility. Lately, remote working has become the norm, so adjusting your accounting processes in line with this shift makes sense.
Protect Your Business - The Six Types of Insurance You Need to Have
Worried about what might happen in the future? Business insurance acts as safety nets for any company.
Every industry can have a wide range of liabilities.
A dental practice may not need the same types of insurance as a shoe manufacturer or a digital marketing agency.
However, there are a few essential types of insurance that all companies will need, as mandated by law or otherwise.
Worker’s Compensation
This type of insurance covers medical treatments, death benefits, disabilities, injuries, and other potential work-related liabilities.
It’s something every business should have after hiring its first employee. That said, it may not be as necessary if you don’t have any full-time employees.
Professional Liability
Not just service companies, practically every business needs protection against negligence claims. Professional liability insurance can protect against claims of harm or damage as a result of non-performance or mistakes.
As you may expect, your industry will have its own set of standards, concerns, and situations covered under this type of insurance.
Property Insurance
A property insurance policy can protect against a wide range of physical damage. It’s something that businesses need whether they lease or own the property.
Through property insurance, a company can also protect their physical assets like inventory and equipment.
Furthermore, it can protect a business from environmental damage such as floods, fires, and malicious offenses such as theft.
Product Liability
Service-based businesses may not need this as much. However, companies that sell products can’t afford to do without product liability insurance.
This can help protect the business from damages caused by the use of its products. It’s a flexible type of insurance that can cover a specific product or a range or category of products.
Business Interruption
One of the most overlooked and undervalued insurance policies. It can cover a range of environmental or even catastrophic events that lead to a halt in operations.
Simply put, a business interruption insurance policy can help keep a business afloat when disaster strikes.
Having this insurance could compensate for lost income when you need it most. However, most companies covered by this insurance are those that have a physical location, like retail stores, for example.
Data Breach
Data breach insurance policies are rather new. But they can be invaluable for businesses that work with vast amounts of sensitive information.
Storing any non-public client and employee data makes a company liable for its security. The insurance could protect in the event of a hack or physical data breach occurs.
Consider Bundle Insurance Packages
Insurance can add up, especially when a business needs coverage across multiple areas.
Therefore, some business owners choose bundle packages to save money.
For example, a business owner’s policy or BOP offers a lot of what a company might need:
- Vehicle insurance
- Property insurance
- Crime insurance
- Business interruption insurance
Such a package may not cover everything, but it covers most, and it’s cheaper than getting each policy individually.
Every business has Some Risk.
No company has zero operating risk. For small companies, one lawsuit can be enough to call it a day.
In this regard, having the right insurance types can be vital in ensuring your success.
How to Avoid Common Money Leaks in Your Small Business
Money leaks in your small business eat away at your profits without you even knowing about it. Even if your business seems to be in great financial health, you should regularly check for leaks to ensure that you’re not unwittingly wasting money. Plugging money leaks can help to reduce your spending and thus boost your profit margins without too much extra work on your part. Here are the most common money leaks to look out for and how to fix them.
1. Online Advertising
It’s easy to let advertising fees get out of hand. Social media pay-per-click fees may seem small, but they add up and can present a significant money leak for your small business. Keep a close eye on any social media or Google advertising campaigns to ensure that you’re not running up a big bill. It’s also important that you regularly review the effectiveness of these adverts. If they’re not bringing in business, they’re a wasted expense.
2. Subscriptions
At some point, we’ve all signed up for a free trial with no intention to continue, then forgotten all about it and ended up paying. Other times, we stop using a service but forget to cancel the subscription. It’s all too easy to let your business leak money this way, but it all adds up. Review your subscriptions regularly and promptly cancel any that are no longer benefiting you.
3. Power Usage
Small mistakes like leaving the lights on overnight and forgetting to switch off devices may not seem like a big deal, but they can seriously eat into your profit margins over time. It’s important to get into good energy-saving habits and encourage your staff to do the same.
There are many other ways to cut down on electricity usage, such as investing in insulated blinds or switching to energy-efficient lightbulbs. Although these changes do present an upfront cost, they will save your business a significant amount of money in the long term.
4. Office Supplies
It’s easy to go over the top with office supplies, so take some time to assess what is and isn’t necessary. Thousands of multicoloured sticky notes are fun, but they’re hardly a necessary expense. Furthermore, many businesses waste a lot of money on printing, which is easily avoidable in the age of cloud-based software.
5. Credit Card Fees
Being lax with your credit card payments is a surefire way to create unnecessary costs. By clearing your balance each month - or at least as much as possible - and paying attention to any annual or hidden fees involved, you can save your business money and boost your profit margins.
When signing up for a credit card, don’t get distracted by the attractive rewards. Make sure that you read the fine print and understand the fees before you choose a card. This will help you to use your card wisely and avoid any money leaks.
6. Smartphone Bills
If you’re not keeping a close eye on your smartphone bills, you could be paying a lot more than necessary. Make a habit of reviewing your charges every month to ensure that you and your staff aren’t exceeding your plans. Take a close look at your usage, too, because you could be paying for more than you’re actually using. It’s also worth shopping around regularly to see whether or not you could benefit from switching plans or providers.
It Pays to Plug
By plugging these common money leaks, you can cut down on costs without making any real sacrifices. Regularly checking for leaks helps you make your business budget go further, making sure you don’t grow complacent. Get into the habit of regularly performing basic checks to maintain a healthy profit margin and prevent your business from losing money.
How to Know if It's Time to Increase Your Prices
Selling your product cheap could be a significant detriment to your business. On the other hand, realistic pricing is a sure way to success.
Determining the best price for your product isn't always straightforward.
Many new companies and small businesses start with lower prices to get a foothold on the market. But if this approach is maintained for too long, constantly underpricing could harm the business gravely.
The thought of raising your prices can be frightening, as some business owners become wary of driving customers away. But if you can realistically adjust the prices to the market, it will help your business grow.
Luckily, some tell-tale signs will inform you when a change is needed.
Sign #1. Rising Demand and Increased Workload
A sure sign you need to raise prices is if your company starts facing more demand than it can handle. Having an abundance of new orders is excellent, but if you're overworking all of the time, it might mean your services are too cheap.
People find affordable prices very tempting and might disregard the quality of the service in favour of a lesser cost. But, if you're confident in your company’s work, somewhat heftier prices will let you keep the respectable customers and attract new ones. At the same time, the workload could diminish while the profit remains the same.
Going for reasonable prices that take the quality, the work, and expenses into account will leave you with a manageable number of customers. These customers will stay with your company longer, and both sides will be more satisfied.
Sign #2. You Have the Cheapest Offer on the Market
Keeping track of what the competitors are doing is always recommended. It's useful to be aware of the strategies and models that others employ so you can adjust and improve your business.
The same goes for pricing.
It might seem counter-intuitive, but having the lowest price out of all competitors won't benefit your company in the long run. People associate low prices with cheap service and will rarely opt for such companies.
A medium price range is the most attractive, and even companies with higher prices can achieve great success, depending on how well they build their brand.
Being the cheapest might get you some customers at first, but the reputation that comes with it will eventually harm your business.
Sign #3. You've Kept the Same Prices for a Long Time
While it's not obligatory to raise prices yearly, it's a prevalent practice. This happens due to the way markets evolve and changes in inflation and living standards.
Successful businesses make small adjustments to accommodate these changes, so a keen awareness of market trends is necessary. If it's been some time since you've last made a price change, it could be worth consideration.
But beware not to compensate with large price movements. Instead, create a plan of smaller but consistent increases.
Realistic Prices Can Advance Your Business
There's a sweet spot between going too high and too low with your prices. And if you get it right, your company will continue to grow and develop.
Don't fear losing customers over a higher price. Set it up realistically, and you'll start attracting the ideal customers for your business.
How to Align Your Personal and Business Goals
Knowing how to set business goals and align them with personal goals can increase productivity, profits, and employee motivation.
Business goals don’t always have to reflect the personal goals of the employees, nor those of the owners or management. However, if a company member starts thinking that their work doesn’t provide them with benefits or growth, their productivity and outputs may suffer.
A good leader and manager needs to have the company’s interest in mind, as its purpose stands above that of an individual. However, that becomes impossible when members don’t feel valued.
Setting the business goal per employees’ personal growth and plans will help them reintegrate into the office and keep productivity and morale high. These are some of the most effective methods for workforce alignment.
Tip #1. Know the Mission and Vision
The company’s vision is the ultimate goal and the purpose behind its existence. It serves as an imperative and puts the business as a timeless entity that solves a particular problem in society. On the other hand, the company's mission is the way it operates and how it plans to achieve the vision.
Keeping the mission and vision statements clear and easy to remember helps ground the employees and the leaders, allowing them to become part of a well-oiled machine that provides the best service possible.
Tip #2. Make Goals SMART
In the business dictionary, the goals need to be SMART:
- Specific
- Measurable
- Achievable
- Relevant
- Timely
Ensuring that all company goals and mission statements abide by these measures allows management to have an easy overview of how employees and the various departments perform against expectations.
SMART goals benefit from breaking down into component pieces, allowing for more straightforward task allocation, management, and reporting.
Tip #3. Focus on Goals Rather Than Incentives
Providing workers with incentives doesn’t give them a lasting benefit or change their way of operating within the company. These temporary solutions usually only hurt long-term performance and productivity by enforcing a culture of coercing employees to finish work to receive a reward.
Furthermore, incentives that are not worth the apparent effort will hurt the company’s standing as a worthwhile employer and may put off future clients. Upper management can also hurt profits if they dole out incentives for tasks that should be the norm.
Tip #4. Ensure a Good Cultural Fit
Employers have the final say on the formalization of company culture and statement. And employees who don’t align with these goals won’t further the company’s vision and may clash with management.
Properly vetting candidates for important business positions will ensure their goals align with both the leader’s personal goals and the company’s mission statement.
For example, an interviewee that looks perfect on paper but lacks the teamwork needed for the role probably won’t relish a team environment.
The Endgame
A company’s goal is usually relatively clear: achieve the vision and make a profit. However, employees’ personal goals can be different and more complex and thus, will need to be tackled on an individual basis for the business to succeed.
With proper management, transparent communication, and a goal-oriented culture, any company can accomplish growth and align members with its vision.