How To Set SMART Objectives For Your Business Plan

When starting up a business you will soon learn that a business plan will be very useful. The business plan is very important and has many uses. For example, to raise capital and shares you will need a business plan to present to lenders and banks. A business plan will also help you devise a blueprint for your business in terms of what it will achieve and how it will achieve it.

It is important that you set out clear objectives so you know what you are aiming for. These objectives will need to go into your business plan. The most effective way to use objectives is to set SMART objectives. SMART is an acronyms for Specific, Measurable, Achievable, Realistic and Time.

Specific

Your objectives should be specific and not ambiguous. If you are forecasting that your business will be increasing sales compared to last year then you need to be specific about what that increase will. For example, sales will increase by 15% by the end of the next financial year.

Measurable

Measurable objectives enables you to identify if progress is being made or not. Therefore, avoid using ambiguous terminology such as the best, the largest, the fastest etc. Measurable targets should include sales turnover, net profit and capital expenditure.

Achievable

Your objectives must be achievable. This means your business must have the capacity and resources available to achieve what you set out to do.

Realistic

It is easy to be carried away by setting objectives based on enthusiasm. However, you need to be realistic when setting your objectives. For example, if your business has on average increased its sales turnover by 10% each year then stating that your sales turnover for next year will double needs to be backed up by supporting evidence to prove that it will be possible.

Time

Setting a date and a deadline is very important when setting objectives and goals. Without setting a time when the objective will be achieved will likely cause delays and in many cases the objectives will not be achieved. Avoid vague terms such as short or long-term. You need to clear and set specific deadline for the accomplishment of each objective.

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