Business Plans For Dummies. Paul Tiffany

Business Plans For Dummies

purpose of your company by defining the business that you’re in. But the definition is just the beginning. When the world was recently consumed with the COVID-19 pandemic and the need for an effective vaccine was paramount, stating the nature of the mission was the easy part. But actually figuring out, step by step, how to get there and then get the jab into billions of arms was the real trick. It involved carefully formulated goals and objectives by the multitude of actors involved in the effort.

You don’t have to be planning how to fight a pandemic to know that goals and objectives are important. If you’ve ever planned a vacation trip by car, you know that choosing the destination is essential (and often painful, especially if the kids want to go to Disney World, and you want to refresh your knowledge of the bar scene in Key West). But the real work starts when you begin to work out an itinerary, carefully setting up mileage goals and sightseeing objectives so that your summer getaway doesn’t turn into another National Lampoon sequel. Goals and objectives are vital to successful business planning.

We know you’re eager to get going with your business plan. But spare us a few moments up front to introduce some important ideas that you can take advantage of when you begin setting your own goals and objectives.

Why bother?

Who needs goals, anyway? You may be the type who plans a trip by filling the SUV with gas, stopping at the ATM for cash, and flipping a coin as you head out of town and reach the first intersection. Ah, life, adventure, the thrill of the unknown! Why waste time trying to decipher a map when you’re just out for the ride? Maybe your approach is fine for a quick getaway break, but for a company, failing to set business goals can lead to more serious consequences — real serious.

If your business opportunities are so obvious and so overwhelming that you don’t need to define a particular course of action to reach your ultimate destination, you’ve won the business planner’s lottery. Be like the first-in folks with Bitcoin: just get out there and scoop the loot as fast as you can. Such opportunities are relatively rare, however. You’re more likely to run into one hazardous crossroad after another in your quest for gold, and a lack of careful planning can be dangerous indeed. Note the following examples:

Planning blunders have been partly blamed for fiascoes involving certain infamous product introductions, including the Ford Edsel in the 1950s, New Coke in the 1980s, and the Apple Newton PDA in the ’90s.

Motorola ultimately lost more than $5 billion on Iridium, its ill-planned low Earth orbit mobile telephone satellite system. By 2000 the venture was bankrupt.

In 2004 Google launched Orkut and in 2011 it introduced Google +. These online services were designed to give this innovative firm entry into the highly lucrative social media platform market. But by 2014 Orkut was gone, and in 2019 Google + was pulled, unable to compete against established incumbents like Facebook, Instagram, and Twitter.

Even the biggest can fail when they don’t do the heavy lifting required in business planning. Moreover, just because a company is successful in one sandbox doesn’t give it a free pass to play in another. Clearly defined goals and objectives can keep you from deviating down those deceptive rabbit holes, no matter how intriguing they may appear at first glance. Watch where you stray as you might stumble instead. Ouch!

Setting business goals and objectives provides an important insurance policy for your business: the opportunity to plan a successful course of action and then keep track of your progress. One way to focus your thinking when it comes to goal definition is to use the “SMART” approach. That is, your goals should be Specific, Measurable, Attainable, Relevant, and Time-bound. This is a nifty little guideline to keep you from running off the track with goal statements that are too broad or so over the top that no one believes in them. Good goal-setting is not simply box-checking by the business planner. It’s providing direction for your future.

Goals versus objectives

After you complete a mission statement, your business goals lay out a basic itinerary for achieving your mission. Goals are broad business results that your company absolutely commits to attaining.

Goals are typically stated in terms of general business intentions. You may define your company’s goals by using phrases such as “becoming the market leader” or “being the low-cost provider of choice.” These aims clearly focus the company’s activities without being so narrowly defined that they stifle creativity or limit flexibility.

In working toward set goals, your company must be willing to come up with the resources — the money and the people — required to attain the intended results. The goals that you set for your company should ultimately dictate your business choices throughout your organization and may take years to achieve. Goals should forge an unbreakable link between your company’s actions and its mission.

Simply setting a general goal for your company isn’t the end of the story; you also need to spend time thinking about how to get there. So, your company must follow up its goal with a series of objectives: operational statements that specify exactly what you must do to reach the goal. You should attach numbers and dates to objectives, which may involve weeks, months, or sometimes even years of effort. Example: We will achieve sales revenue of $10 million by 2024. They help you realize when you reach a given objective.

Objectives never stand alone. They flow directly from your mission and your values and vision (see Chapter 3), and outside the context of their larger goals, they have little meaning. In fact, objectives can be downright confusing.

The goal “Improve employee morale,” for example, is much too general without specific objectives to back it up. And you can misinterpret the objective “Reduce employee grievances by 35 percent over the coming year” if you state it by itself. (One way to achieve this objective is to terminate some employees and terrorize the rest of the workforce.) When you take the goal and objective together, however, their meanings become clear.

Want an easy way to keep the difference between goals and objectives straight? Remember the acronym GOWN: G for goals, O for objectives, W for words, and N for numbers. For goals, we use words — sketching in the broad picture. For objectives, we use numbers — filling in the specific details. For example, your firm might set a goal of becoming “the perceived quality leader” in its space. But to get there, it might want to define an objective of “reducing errors in the shipping department to less than 1 percent during the next six months.” The latter gives specificity to the generic statement of the prior and, as such, provides a concrete guide for action to those charged with getting the job done.

If you already use different definitions for goals and objectives, don’t worry; you’re not going crazy. What we do find crazy is the lack of any standard definition of terms when it comes to business planning in all its areas and topics (some firms out there are still trying to differentiate between vision, values, and mission). The important task is to settle on the definitions that you want to use and stick with them in a consistent manner, communicating these clearly to everyone in the organization. You may even want to add in a glossary at the end of your business plan that specifies the key terms used. That way you prevent any unnecessary confusion within your company.

Efficiency versus effectiveness

Talking about goals and

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