Goals, Milestones, and KPIs are some of the most important tools that will help drive your business in the direction you’d like to take it. Having goals, milestones, and KPIs in place for both the short and long term contributes to a well-defined path forward to stay on track and on budget. It is important to understand exactly what they are in order to correctly apply them to fit the needs of your business.
The terms goals and milestones are often used interchangeably since both refer to something that businesses need to achieve for the accomplishment of their ultimate objectives. However, a goal is made up of milestones which means goals are set first and then divided into small steps, known as milestones. Once milestones are defined, key performance indicators, or KPIs, are created to measure the performance of the moving parts inside the business towards the larger goals. Goals and milestones both need to be SMART, i.e., specific, measurable, achievable, relevant, and timely.
Think about launching a small business. First, you’ll want to define your business idea. The goal is to launch a business. Second, you map out the journey to define the action steps needed to move forward toward the business launch, and the milestones. Once the business has launched, you may define the KPIs to measure and evaluate your progress and set new goals based on the information obtained from the KPI data.
Keep in mind, that KPIs will not always necessarily feed into goals, as goals do to milestones. However, the information from your KPIs may inspire new goals as you learn more about the business’s performance. Let’s start by defining each category and what purpose they may serve.
Goals are the first step and most familiar to many people. Goals serve as the foundation of planning. Goals tend to be more general and higher level. Think of the goals your business wants to reach. First, clearly describe the goal or goals in a simple and uncomplicated manner. Second, set goals that are ambitious yet achievable based on the stage of business you are in, your capabilities, and your performance capacity. Next, set your goals for the short term, perhaps six months to one year. Then set your long-term goals for years one through five. Finally, make sure your goals align with your business’s overall mission, vision, and business culture to engage your team and stakeholders. Next, let’s look at milestones. Keep in mind that the success of a goal can be tracked when a milestone is achieved.
Milestones are events that we build our business around to actualize. For example, launching a product by a specific date, opening a new location, meeting a deadline with customers, and staying on budget is just a few. Milestones help make the plans for your business specific, real, and concrete. Milestones serve as the bridge between where you want your business to go and where you are now. By setting appropriate milestones for your business, you are taking the first step to realize its potential.
Milestones are typically part of business planning and can keep the plan moving forward. By using business milestones in your goal achievement planning, you can turn your ambitions into reality to continuously move your business forward, both short and long term. Effective milestones have solid goals and can be measured by KPIs.
Let’s look at a few suggestions for creating milestones. One of the easiest starting points is to begin creating milestones inside a business plan. Regardless if you are building a full business plan or a mini business plan, milestones are a foundational part of business planning in any stage. If you don’t have a business plan, make sure the goals are clear. Following the format of a SMART goal, you’ll want to make each milestone specific, measurable, actionable, relevant, and timely. As you approach each milestone date, make sure you are looking at the results and celebrating the successful achievement of the ones you complete, and closely evaluating what went wrong on those that you didn’t achieve to recalibrate them.
For example, if your small business has a goal for 25% growth over the next year, milestones you may want to consider these milestones plus your own:
Design an effective business model and business plan
A business model can be done first as a foundational part of planning. A business model describes how a business will create, deliver, and maintain value as a viable and sustainable business. Business models are useful to develop strategies for defining your unique value proposition, customer acquisition, team recruitment, key partnerships, and business development strategies.
A business plan is different. A business plan is a document that details the business strategy and projected financial performance in the outlying years. A well-developed business plan lays out a map for the execution of the plan in the key areas of business planning such as marketing, financial forecasting, and operations. Both the business model and the business plan are key elements to a business’s development, growth, and short and long-term decision-making. The model and plan are the vehicles and the roadmap to the 25% growth strategy.
Attain repeat customers or customers who advocate for your business
As a startup, your milestone might be to gain your first repeat customer to reach the 25% increase. If you are an established company, your milestone could either be to increase repeat customers or maintain customers who also refer business to you. Reaching these milestones may mean you need to engage customers after the sale with online content or additional marketing strategies.
Develop an effective and budget-friendly marketing strategy
Once customers know about your business, find-ability is key. If the business is to grow, customers need to be able to find you and understand why they need you. Your milestones can be used in your marketing plan to set objectives and deadlines, and stay on budget. You can also use marketing milestones to measure the success of your campaigns by creating KPIs which we will talk about in the next section.
Build the right team
Building the right team and aligning talent inside your business is typically done incrementally. Using milestones in this area of planning, you can create milestones to build out the timeline for hiring based on growth, projects, and budget. Human resources are a key factor in the growth of a business and milestones in this area are incredibly valuable to support growth and scalability as you move your business forward. To achieve that 25% growth goal, setting milestones for the team you may need to achieve this growth will take planning.
Once you have milestones, you’re ready to create a way to continually track your progress toward achieving them. Key Performance Indicators (KPIs) are some of the best performance measurement tools available. In a small business, tracking relevant KPIs can assist in decision-making, help you set strategic objectives, and allow you to evaluate your business process in real-time based on factual data.
There are various types of KPIs, and the opportunities to define them are truly endless. Although KPIs don’t necessarily feed into goals as neatly as goals fit into milestones, they can most definitely be used to discover and monitor your business’s position in areas such as customers, marketing, external and internal operations, and your business’s overall success.
Monitoring KPIs is critical to your business’s success as you can find exactly what is going right or wrong based on data. Once you are clear on what is working and what is not, you can easily begin to make improvements. Consider starting to create KPIs in the areas of sales, finance, and marketing to begin with.
Monitoring sales can help you understand the sales growth and profitability, sales channels and pipelines, benchmark against industry competitors, and customer retention or turnover.
Using KPIs to monitor financial activities in the areas of accounts payable turnover, accounts receivable, inventory turnover, profit margins, break-even points, working capital, and growth rates are great ways to monitor the trajectory of the business towards profitability.
KPIs for marketing should be relevant to what is going on in the overall marketing strategy. KPIs can be used to track engagement, and return on investment from paid advertising campaigns, determine and track costs per lead, customer acquisition, qualified sales leads, and sales revenue.
Setting goals, building the stepping stones towards goal achievement with milestones, then monitoring performance with KPIs is a strategic way to launch, run, and grow a successful business. These practices will help you make unbiased decisions on what is working and what is not working and provide you with valuable information for any needed redirection of resources to make the necessary changes to propel your business forward. All efforts can be quite impactful towards ultimately saving you time, energy, and money inside your small business.