Rules for setting business goals and objectives: why and how to be SMART

We all know that nothing works without a plan, and a plan cannot work without having its goals set.

That goes for any type of plan, whether it’s business or personal finance, college degrees or NGO programs, website promotion, or weight loss.

Setting goals and milestones is of crucial importance to any planning activity and is at the core of its success or failure.

Knowing how to set goals is not exactly rocket science in terms of complexity, but any strategist must know the basic rules of how to formulate and propose goals. We will see in this article why objectives play such an important role in the planning and strategic activities of a company, how they influence all business processes and we will review some guidelines for setting objectives.

The importance of setting goals

One might wonder why we need to set goals in the first place, why not let the company or a specific activity run smoothly in the future and see where it goes. That would be the case only if we really don’t care whether the activity under discussion will be successful or not: but then, to use a popular saying, “if something deserves to be done, then it deserves to be done well”. In other words, if we don’t care about the results, we shouldn’t continue the action at all.

Setting goals before taking any action is the only right thing to do, for several reasons:

– gives a target to aim for, so all actions and efforts will be focused on achieving the target instead of being used inefficiently;

– gives participants a sense of direction, a glimpse of where they are going;

– motivates leaders and their teams, since it is quite usual to establish some kind of reward once the team has successfully completed a project;

– Offers support in evaluating the success of an action or project.

The 5 Rules of Goal Setting: Be SMART!

I’m sure most managers and leaders know what SMART means, well at least when it comes to goal setting. However, I have seen some of them who cannot fully explain the five characteristics of a well-established goal: things are a bit fuzzy and muddled in their minds. Since they cannot explain in detail what SMART goals really are, it is highly doubtful that they will always be able to formulate such goals.

It’s still not clear where the confusion is coming from: maybe there are too many sources of information, each with a slightly different focus on what a SMART goal really is; Or maybe most people only briefly “heard” about it and never quite get to the substance behind the packaging.

Either way, let’s try to figure out the meaning of the SMART acronym and see how we can formulate efficient goals.

SMART illustrates the 5 characteristics of an efficient goal; what represents yesspecific- METEReasy- HASattainable – Rlifting up – Tprompt


When it comes to business planning, “specific” illustrates a situation that is easily identified and understood. It is usually linked to some mathematical determinant that prints a specific character to a certain action: the most common determinants are numbers, ratios and fractions, percentages, frequencies. In this case, being “specific” means being “precise.”

Example: When you tell your team “I need this report in multiple copies,” you didn’t give the team any specific instructions. It is not clear what the determiner “several” means: for some it may be three, for some it may be a hundred. A much better instruction would sound like “I need this report in 5 copies” – your team will know exactly what you expect and will be less likely to fail to deliver the desired result.


When we say that an objective, a goal, must be measurable, we mean that there is a strict need to be able to measure, to track the action(s) associated with the given objective.

We must establish a different system or establish clear procedures for how actions will be monitored, measured and recorded. If an objective and the actions that correspond to it cannot be quantified, it is most likely that the objective is poorly framed and we should reconsider it.

Example: “our business must grow” is an obscure objective, not measurable. What exactly should we measure to know if the objective was met? But if we change it to “our business must grow in sales volume by 20%”, we have a measurable goal: the measure is the percentage increase in sales from the present moment to a given moment in the future. We can calculate this very easily, based on the recorded sales figures.

3. Be REACH!

Some use the term “attainable” instead of “attainable”, which as you will see is merely a synonym and we should not get bogged down in analyzing which one is correct. Both are.

It is understood that every leader will want their company/unit to deliver outstanding performance; this is the spirit of competition and such thinking is much needed. However, when setting goals, you must first take a hard look at the factors that determine the success or failure of these goals. Think about your team, your skills, your motivation: are they enough to meet your goals? Do you have the means and capabilities to achieve them?

Think about it and be honest and realistic with yourself: are you really capable of achieving the goals you have set for yourself or will you most likely be disappointed? Always set goals that have a good chance of being met: Of course, they don’t have to be “easy” to achieve, you are entitled to set difficult goals as long as they are realistic and not futile.

Example: You own a startup moving company and set a goal of “becoming the #1 moving company in the state.” The problem is that you only have 3 trucks available, while all your competitors have 10 or more. Your goal is not possible; try a more realistic one instead, like “getting to the top 5 fastest growing movers in the state.”


This notion is a little more difficult to perceive in its full meaning; therefore, we will start to explain it using an example first.

Imagine going to the IT department and telling them they need to increase their profit to revenue ratio by 5%. They will probably look at you in awe and mutter something mediocre about managers and the way they alter people’s minds.

Can you tell what is wrong with the above lens? Of course! The IT department has no idea what you’re talking about and there’s nothing they can do about it: their job is to build and maintain your computing infrastructure, not understand your economic talk. What you can do is set a goal that IT can have an impact on and that will eventually lead to the raise you wanted in the first place. How about asking them to reduce hardware and software expenses by 10% per month and to be more cautious with consumables within their department by not exceeding the allocated budget? They will surely understand what they need to do because the goal is relevant to their group.

So the quality of a goal to be “relevant” refers to setting appropriate goals for a given individual or team – you have to think about whether they can actually do something about it or whether it’s irrelevant to the work they do.


There is not much to discuss about this aspect, as it is probably the easiest to understand and apply.

Any usable and achievable goal should have a clear time frame of when it should start and/or when it should end. Without having a specified deadline, it is practically impossible to say if the objective is met or not.

For example, if you just say “we need to increase profit by 500000 units”, you can never know if the goal was achieved or not, one can always say “well, we will do it next year”. Instead, if you say “we need to increase profit by 500000 units within 6 months from now”, anyone can see in 6 months whether the goal has been reached or not. Without a clear and defined time frame, no goal is good.