What are business goals? Types and examples

As a manager or business leader, you may be wondering how to help lead the company you work for in the right direction. Business goals help to set up a company for success. With long- and short-term goals, you can plan strategic actions and stay focused.

By reading this guide, you will learn about various types of business goals and objectives and how to set them.

Here is what we will cover:

• What are business goals?
• Types of business goals you may set as a manager
• How to set business goals as a manager
• Examples of business goals companies typically set
• Adjusting business goals
• Conclusion
• FAQs

What are business goals? 

A business goal is a specific, measurable outcome that a company aims to achieve within a certain timeframe. These goals can vary widely. From increasing revenue, improving customer satisfaction and expanding market share, to enhancing operational efficiency. Business goals provide a clear direction for the company. They help align the efforts of all team members towards a common purpose.

Goals play a crucial role in forming a business strategy and guiding decision-making processes. Here is how:

• Direction and focus: Goals provide a clear direction. They help you prioritise tasks and allocate resources well. Without goals, a business might lose focus and struggle to progress.
• Motivation and engagement: Business goals can motivate employees. When team members know what they are working towards, they are more likely to be engaged and committed.
• Performance measurement: Goals provide benchmarks for measuring success. By comparing actual performance against set goals, businesses can assess progress and adjust.
• Strategic planning: Goals help in strategic planning. They help you in outlining the steps needed to achieve the outcomes and in identifying obstacles.
• Decision making: Goals guide decision-making by providing criteria for evaluating options. You can choose the option that best aligns with the company's objectives.

The difference between goals and objectives in a business context

While goals and objectives are often used interchangeably, they have distinct meanings in a business context:

• Goals: These are broad, long-term achievements that a business aims to accomplish. They are general statements about what the company wants to achieve in the future.
• Objectives: These are specific, measurable actions that help achieve broader goals. Objectives are short-term and have clear, defined outcomes.

In summary, business goals and objectives are essential tools for guiding your company towards success.

Types of business goals you may set as a manager 

Explore the different business goals you can set for your team or company:

Short-term vs long-term business goals

Short-term goals: These are measurable objectives you want the team to achieve in a few days, weeks, or months. They provide motivation and a sense of achievement as you reach each goal quickly. Here are some short-term business goals examples:

• Increase traffic on the company's blog by 20% by the end of the month
• Hire 5 new sales representatives over the next 3 months
• Create 2 social media posts per week

Long-term goals: A business's long-term goals are ambitious outcomes aimed at the distant future. These usually span months or years. Measuring the progress of these business goals may be harder. And they may take longer to achieve. But they provide shared direction and motivation for team members. A company may use a long-term goal as a vision or mission statement.

Here are some long-term business goal examples:

• Increase the company's market share to 35% in the next 10 years.
• Set up 8 offices in the APAC region within 10 years.
• Increase employee retention to 85% in the next 5 years.

Balancing short-term achievements with long-term vision: Long-term goals provide direction, alignment, and inspiration for the team. Yet they may pose challenges in measuring progress and maintaining motivation over extended periods.

Short-term goals, on the other hand, offer actionable steps to move closer to that vision. However, challenges may arise in maintaining focus on long-term objectives amidst short-term demands.

It is crucial to strike a balance between short-term and long-term goals for sustained success. Short-term goals act as stepping stones towards achieving long-term objectives. Breaking down long-term goals into smaller, manageable tasks makes them more achievable. Short-term goals provide the roadmap, guiding the company towards its long-term vision.

Financial goals

Financial, or economic, goals are specific monetary targets a company wants to achieve. These goals can relate to the company's profit margin, cost reduction, investments, or economic stability. With clear business objectives and measurable benchmarks, you can better manage the company's finances.

Financial business goals are often measurable and focus on long-term success. These goals also vary based on which lifecycle stage the business is in.

For example, a company may be in the start-up stage. Its economic goals may focus on getting funding from investors to buy equipment, rent office space, and hire employees. For mature organisations, financial business goals may centre on investing in new technologies and emerging markets.

In this digital age, you can use various financial planning tools and apps to simplify the financial goal-setting process. These tools can help with budgeting, investment management, and even tax preparation.

Non-financial goals

Non-financial goals ensure the long-term sustainability of a business. They contribute to building trust, loyalty, and goodwill among stakeholders. These goals help the company improve its image and stay in business for a long time. Examples of non-financial business goals include brand reputation, customer loyalty, employee training and development, and community involvement.

It is vital to strike a balance between financial and non-financial goals. While financial goals drive profitability and growth, non-financial goals focus on building relationships, reputation, and social impact. Both types of goals are necessary for holistic business success.

Non-financial goals play a significant role in corporate social responsibility (CSR). These include engaging in activities like sponsoring charity events and supporting community initiatives. You can thus show your commitment to making a positive impact beyond financial gains.

How to set business goals as a manager 

Developing business goals starts with reviewing past goals and assessing the organisation's current position. Team collaboration and stakeholder feedback ensure diverse perspectives and alignment. Leadership provides vision, while teamwork fosters creativity. Together, this process results in clear goals and action plans.

SMART goals

SMART is a popular goal-setting framework. SMART stands for specific, measurable, achievable, relevant, and time-bound. SMART goals provide clear steps to take and help you stay on track. This makes it easier to achieve them.

Ensure the goal is achievable. This helps motivate you even if the task is difficult. A relevant business goal helps you rank tasks and align them with the business plan. Finally, set a deadline to make sure there's timely progress on the goal.

Here are some examples of SMART goals:

• Increase customer retention rate by 25% within one year.
• Increase revenue from the online store by 10% in the next 6 months.
• Acquire 10 new clients within the next 3 months.

One common mistake business leaders make is setting unrealistic goals. Be realistic about your team's abilities, the company's resources, and time constraints. Break down the large business goal into smaller, more manageable tasks to stay motivated.

Another error is neglecting to have a structured execution plan. Overcome this issue by assigning a project lead to be accountable for the tasks.

Alignment with vision and mission

It is essential to align business goals with the company's vision and mission. To ensure alignment, reflect on the company's values. Ask yourself how each goal is connected to the vision and mission. When there is a misalignment between goals, vision, and mission, there is no clear direction. This can create confusion and a fall in employees’ motivation levels.

A great example of a company that aligns its goals with its vision and mission is Amazon. The vision and mission of Amazon is "to be Earth's most customer-centric company, Earth's best employer, and Earth's safest place to work." Its goals and strategies start with the customer and work backwards.

Amazon is responsive to the customers' changing needs and wants, which has boosted customer satisfaction and increased loyalty. It is constantly innovating to improve user experience. Its huge selection of products, hassle-free return policy, and efficient customer service show its commitment to being a customer-centric company.

Examples of business goals companies typically set 

Explore these examples of business goals:

Profit maximisation

A profit maximisation business goal refers to a company seeking to make the highest profit possible. This may mean extending the store's operating hours, expanding product offerings, or increasing employee productivity levels.

Here are some steps you can take to set profit maximisation goals:

1. Assess and reduce your operating costs
2. Adjust pricing
3. Increase the customer lifetime value
4. Cross-sell products
5. Lower overhead costs
6. Motivate employees

While aiming for higher profits, it is crucial to maintain ethical practices. Avoid reducing costs by using cheap, low-quality materials or mistreating employees. Ethical practices build trust and long-term success.

Example of Setting Profit Maximisation Goals:

Goal: Increase monthly profit by 20% within 6 months.

Actions:

• Reduce Costs: Negotiate better rates with suppliers.
• Adjust Pricing: Introduce a small price increase on popular items.
• Boost Sales: Implement a loyalty program to increase repeat purchases.
• Enhance Productivity: Provide training to employees to improve efficiency.

By following these steps, a company can set clear, ethical profit maximisation goals.

Sustainable development

This business objective means using environmentally friendly and ethical practices. Companies may integrate sustainability into business models and strategies. For example, they may reduce waste production at factories.

Businesses can integrate sustainability by focusing on various areas. These include reducing waste, improving energy efficiency, and ensuring ethical practices throughout their operations. For example, switching to renewable energy sources. Or implementing sustainable supply chain practices.

Sustainability is increasingly important in consumer and investor decision-making. The PwC's Global Investor Survey 2023 found that most investors agree on the importance of environmental, social, and governance (ESG) issues. 75% said that companies' management of sustainability-related matters is an important factor in their investment decisions.

Volvo Trucks Malaysia is working towards achieving net zero by 2040. It uses a vendor development programme to ensure sellers align with Volvo's sustainability strategy. And the company considers ESG when assessing new vendors.

To set a sustainable development goal, you can explore areas such as energy efficiency or plastic usage. Set specific targets and devise ways to achieve them. For example, make the workplace more energy efficient by switching to LED lights.

Increased revenue

To increase company revenue, you can add products or services, add new payment forms, or offer subscriptions. Innovation plays a key role in increasing revenue. It lets companies identify untapped markets, create new products and services, and apply technology.

Improving customer experience can significantly impact revenue. Positive interactions foster brand loyalty, with 86% of consumers willing to pay more for a better experience. Enhancing both online and in-person customer experiences can lead to increased sales and customer retention.

The Humble Food Company faced a 95% drop in revenue due to the COVID-19 pandemic. But then they implemented a digitised point-of-sale (POS) solution. With this they managed to optimise their workforce and costs. Specifically, their loyalty program using the POS cashback function led to an increase in sales.

Improved customer satisfaction

This represents how content and fulfilled customers are when they interact with products and services. You can measure customer satisfaction using different metrics. These include customer satisfaction score, customer effort score, net promoter score, and churn rate.

When customers are happy, they tend to be loyal and may also serve as brand ambassadors. They are likely to share their positive experiences with others and drive word-of-mouth referrals. This can lead to an improvement in business performance.

To improve customer satisfaction, understand customer needs through market research. You can also gather feedback. Keep product quality consistently high by implementing strict quality control measures. Communicate effectively and regularly with customers. Let them know about new product launches and any updates or disruptions.

Business process optimisation

Process optimisation enhances efficiency by identifying bottlenecks and redundancies in the workflow. It helps you improve the quality of products and services. It can also boost profitability and promote innovation. All these factors contribute to achieving your business goals.

Explore process improvement methods and tools to optimise business operations. These include business process automation, business process management, Six Sigma, root cause analysis, and process diagrams.

You can also use technology to automate repetitive tasks. This can free up employees' time for more important work. Employ data analytics to identify areas of improvement within business processes.

For example, Malaysia Airports began using the Lean Six Sigma methodology to improve passenger flow through the airport. It applied this process optimisation to its terminal operations, security screening, and customer experience management.

This improved wayfinding, reduced queue time and congestion, and enhanced maintenance. The company achieved its target. The average queue time at immigration was 10 minutes for departure and 15 minutes at arrival 90% of the time.

Assessing your business goals

Regularly assess the company's strategic goals to ensure you are on track to achieving them. You can use a scoreboard as a visual tool to keep track of your actions. Decide what data to track, and design it in a way that's easy to understand. Update it often for motivation.

You can also gather feedback from team members to assess business goals. For example, they may tell you that the timeline wasn't realistic, as certain tasks took longer to complete. Learn from the issues employees raise, and adjust strategies based on assessment outcomes.

Adjusting business goals 

Here are two ways to adjust your business goals:

Responding to market changes

Business goals should be dynamic instead of static, as the market is constantly changing. Set and adjust business goals according to the latest market trends. Seek customer feedback to get early signals of changing preferences or emerging needs. Engage with customers through surveys and social media platforms to gain insight into how the market is evolving.

For example, more customers may request sugar-free options. This may suggest that the broader market is moving towards health consciousness.

Use Agile methods in your product development process. They are flexible and allow you to deliver your product faster. Use frameworks such as Scrum, Kanban, or Lean and tools such as sprints, backlogs, and user stories to improve and speed up your product development process.

Companies like Yellow Pages effectively responded to the growth of digital and social media by digitising their entire business. They moved from being a print-based offering to providing an online directory for businesses.

Another example would be the toy manufacturer Lego, which faced serious financial difficulties. This was due to changing consumer preferences and low sales. It restructured its operations, streamlined its supply chains, and refocused its product lines. It also introduced the Lego Movie, which helped to boost its brand image and increase sales.

Continuous improvement

Continuous improvement means reviewing the company's performance and upgrading its products, processes, and strategies. It is about reaching a business goal. This can happen over time through incremental changes or at once through a breakthrough improvement.

You can foster a culture of continuous improvement. Do this by allowing employees to identify solutions and make changes in their work areas within agreed guidelines. Create channels to get employee suggestions and feedback and have a system to evaluate and implement their ideas.

Empower employees to take ownership, train them, and recognise and reward their efforts. You will help create a supportive environment where they can experiment and grow. This can bring about positive changes in the organisation and contribute to reaching business goals.

Conclusion 

Business goals are essential to set the direction of a company. They help you devise strategies and stay focused. Set a variety of goals to ensure you are covering all aspects of the company's operations. For example, these can include cutting operational costs and increasing employee satisfaction.

Use the SMART framework to define your business goals and ensure they are achievable. Measure progress and use it to adjust the goals along the way. Also consider market trends and employee and customer feedback.

FAQs 

Here are answers to common questions about business goals:

1. What are some common challenges in setting and achieving business goals?
   One common challenge is that the goals lack clarity. When the team does not have a firm understanding of what the goals are, they are unable to plan specific actions to achieve them. This can cause confusion, frustration, and low motivation. Another challenge is that the goals may be unrealistic in terms of the size of the accomplishment and the period. 
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2. How to set effective business goals as a manager? 
   The first step is to assess the current state of the business through a framework, such as SWOT. After identifying the company's strengths, weaknesses, opportunities and threats, you can decide what needs to be improved. Get external and internal feedback to gain valuable insights. You can then use the SMART framework to set specific and time-bound goals. Finally, think about how to measure progress and use existing metrics or create new ones.
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3. How to communicate business goals to my colleagues? 
   Share the business goals concisely. Avoid using jargon and buzzwords. Assign each team member with specific roles and responsibilities. Emphasise how the efforts of each individual will contribute to achieving the company's broader objectives. 
   Use different internal channels to communicate the goals, such as newsletters, digital signage, and corporate screensavers. Repetitive messaging in various formats can help with message retention. 
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4. How can I react to market changes as a manager? 
   First, foster a culture of adaptability so that employees will embrace changes and be more resilient. Conduct market analysis regularly to identify emerging trends and customer preferences. This can help you anticipate market changes and make informed decisions. Adopt an agile organisational structure to respond to market changes quickly. 
   Encourage experimentation and innovation to develop agility and flexibility in the team. This can help the team to seize opportunities and lessen any negative impacts of market changes.
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5. How can I adjust my company's business goals?
   Monitor and measure the progress constantly and track KPIs to evaluate the results. Depending on the progress and market changes, adjust the scope, timeline, or indicators of your goals. You may even add or remove some goals. Be open to new ideas and innovations and incorporate them into the goals. 
   When modifying business goals, ensure that they are still aligned with the company's mission and vision. Be transparent and communicate the changes to your team and stakeholders and get their feedback and support. 
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6. What are the benefits of setting long-term business objectives?
   Setting long-term business objectives gives you a clear target to work towards and provides motivation and inspiration for employees, especially during challenging times. They help you prioritise tasks, allocate resources effectively, measure progress over time, and celebrate your achievements. 
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7. Are there any tools or software to help with tracking business goals?
   Yes. Here is a list of tools you can use: 
   Asana
   Trello
   Engagedly
   Friday
   15Five
   Jira
   Goalscape
   Lattice
   PerformYard
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8. How often should I review and adjust my business goals?
   It is advisable to review your business goals every quarter to make sure the goals are relevant. Reviewing your goals at regular intervals also helps you track progress and determine if the goals are realistic. 
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9. What strategies can I use to align my business goals with my company's mission?
   Clearly articulate the company's mission and values so that all team members know the purpose of the organisation and its principles. Refer to the overarching purpose and principles to guide the goal-setting process. Always ask "why" to ensure that the goals reflect the company's mission and values.