How to define Long-Term Goals
Last week we met "Same Way Sal". One of Sal's issue is creating clear and understandable goals. Creating goals is only part of the battle we need to track the goals and make changes as needed. Today we are going discuss creating long-term goals, tracking those goals, and what to do when we need to change them.
Creating Long-Term Goals
To create a long-term goal we need to ask, where do I or my business want to be in 5 to 10 year? With Sal, his goal was to retire by selling his business. SMART goals are a great way to gauge if your goals are specific enough. SMART stands for
Sal's goal of selling his business to retire doesn't really meet any of the above criteria.
- It's not specific
- When does he want to retire
- How much does he need to sell the business for
- It's not measurable because there are no specifics.
- If he sold the business for $100 technically he would have achieved his goal
We will skip the last three because they hang on the first two. A better goal would be that Sal wants to retire in 6 years and wants to sell the business for $1.5 million. This is:
- Sell business in 6 years for $1.5 million
- Based on the current value of $1.2 million Sal would need to increase the value by $0.3 million to meet his goal
- If the business is currently worth $1.2 million value the increase of $0.3 is achievable
- This goal is in line with Sal wanting to retire in 6 years
- The goal is limited to 6 years.
Tracking the Goal
Now that Sal has a SMART goal. How does he track it.
- First, Decide how to calculate the valuation
- Entrepreneur had a good article here on quick valuation.
- Second, Track the current value of the business year over year verse the goal
- I would recommend using a dashboard software like Fathom HQ to track the goal
This seems pretty simple and it is but it is also the most important step. This will tell you if you are on track to meeting your goal or it could tell you that your goal has become irrelevant or unachievable.
For example, if in year 2 Sal's business was worth $2 million than his goal of $1.5 million would be irrelevant on the other hand if the value was only $0.4 million in year 2 his goal may be unachievable. At this point, Sal would want to reassess his goal.
Reassessing You Goal
Going on with our example if in year 2 Sal's goal has become irrelevant or unachievable than it needs to change. Sal could either change the goal to wanting to sell his business for 2.5 million in 4 more years or in scenario two sell the business for 1 million in 4 years. After changing his goal Sal would want to put it through the SMART exercise to see if they meet all the criteria still.
Having SMART goals gives you and your employees motivation to meet them. It moves you from goals that seem unachievable to ones that seem within reach. The last thing I will add is this. If you have 20 SMART goals you will be facing the same issues as if you didn't have any SMART goals. You should limit yourself to 3 to 5 SMART goals. That way you are focused and all of the goals become achievable.