The Psychology of Setting Business Goals

Setting goals for your business is crucial to any business plan. You may already have read about the importance of making sure that goals are SMART (Specific, Measurable, Achievable, Realistic and Time-specific).

Sounds easy, but the practical side of business planning often ignores the emotional undercurrents. Do you sometimes find the process of setting goals a bit confronting? Do you get scared to aim too high in case you fail?

The fact that most entrepreneurs experience failure many times before they succeed may strikes you as cold comfort, especially if you have a high-achieving, perfectionist nature. How can you keep everything in perspective and find ways to set goals that make you feel inspired rather than afraid?

One technique is to try to base your goals on activities rather than outcomes, and avoid goals that could fail due to reasons outside your control. For example, maybe your overall goal is to increase your profit margin by 5 per cent. Your objectives for this month could be to contact one supplier per week to renegotiate costs, and to review and possibly change freight companies. Although you can’t guarantee you’ll achieve an increase in profit, you can be reasonably sure you’ll achieve the other objectives that you’ve set yourself.

By setting goals according to what you plan to do, rather than what you plan to gain, you can be much more confident that you’ll achieve what you set out to do.

The other trick is to reduce long-term goals into smaller, more achievable steps, rather than feeling overwhelmed by one huge goal. For example, imagine that your vision is to establish an organic cafe and market garden. Sounds like a big undertaking, but try splitting this vision into bite-sized chunks. Maybe your goal for this week is to start looking at land; your goal for next month is to apply for a loan and your goal for six months’ time is to purchase some land. As each six-month period rolls by, review your progress and set another series of smaller goals, split into weeks and months.

Last, never forget that your business is only one part of life and that even if your business were to fail, life would still go on. What are your other goals? Maybe in the next five, 10 or 20 years, you want to have a couple more kids, return to school or even write a novel. Often you’ll realise that the things you really value aren’t contingent upon the success of your business, and that even if your business does flounder, life has many other things to offer.

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