In my recent post on action plans, I recommended setting aside some time in December to set goals for the coming year. I’m a big believer in goals because they help keep me focused on what really matters to me, and they give me a reference point to know whether I’m making progress toward those priorities. More specifically, I’m a fan of SMART goal-setting: creating goals that are specific, measurable, attainable, relevant, and time-based. If you’ve worked in the corporate world for long, you’ve probably come across this concept. But even if you haven’t, it’s fairly easy to understand and remember. Here’s how you can put it to work at any stage of the franchise life cycle.
The Origins and Value of SMART Goal-Setting
Most people attribute the SMART goal-setting framework to consultant George T. Duran, who described it in a 1981 issue of Management Review. The idea has its root in “management by objectives,” a concept created by management consultant Peter Drucker. Drucker encouraged managers to break down an organization’s broader goals into measurable, understandable steps that both managers and employees could agree on and complete.
I like SMART goal-setting because it makes big, audacious goals manageable and achievable. Starting a business and being your own boss can be overwhelming, especially if you’re a first-time entrepreneur. With the SMART framework, you can figure out your own marching orders and see whether you’re making sufficient progress as time goes by. In other words, to quote one of my favorite sayings, “What gets measured gets done.”
How you use the SMART framework will vary, depending on where you are in the business process. Let’s look at how the goal-setting process might work when you’re launching your franchise business, maintaining it, or growing it.
SMART Goal-Setting When You’re Launching a Franchise
When you’re first getting started as a franchise owner, SMART goals are key to getting your business off the ground. You’ll need to complete an extensive to-do list as part of your launch process. At the same time, you’ll want to keep sight of why you’re doing this in the first place. So think about goals that quickly move you forward toward launch and a successful startup period, while also helping you make progress toward your larger, long-term goals.
At this stage, your goals should be highly specific (S), and you should plan to measure (M) them closely. New businesses often operate on a shoestring. You can’t afford to overlook small amounts of revenue or expenses, or treat small decisions lightly. Everything you do, every dollar you take in or spend, lays another brick–or makes another crack–in the foundation of your business. Attainable (A) goals are also extremely important at this stage. Early wins, even small ones, can provide the motivation you need to keep working the long hours and pushing through the challenges involved in getting a business off the ground.
SMART goal-setting at this stage should focus primarily on goals that are relevant (R) to your launch and startup period. Measure your progress on a tight timeframe (T)–when a business is just getting off the ground, I check key metrics daily or weekly. Keep your longer-term goals in the back of your mind to keep yourself on track, but don’t let them distract you from the details.
Not-SMART launch goal: I want to make a lot of money my first year.
SMART launch goal: I want to make $5,000 in revenue each week for the first quarter, then increase that by 25% per quarter for the rest of the year.
SMART Goal-Setting When You’re Maintaining Your Franchise
Whether you’re opening one franchise location or several, you’ll need to decide what to do after you’re through your startup period. If you are not looking to constantly grow your business, this is when you can shift into maintenance mode. You can relax a little and reap the rewards of your hard work–but don’t get complacent! Some franchise owners look at their healthy balance sheet, see the smiles on their customers’ faces, notice how competent their employees are, and figure the business can just run itself. But that’s not true.
No business is ever completely self-sustaining. Good employees quit, unexpected situations occur, or new competitors enter the market. Even executive franchise owners, who leave day-to-day operations in the hands of a franchise manager, still need to put in their 5-10 hours per week to keep everything on track.
So even if your franchise is running smoothly, continue your practice of SMART goal-setting. At this stage, you can make your goals less specific (S) but should still measure (M) your progress regularly. You should have more resources–both in terms of employees and cash reserves–so you can be more ambitious when you consider what is attainable (A). If you’ve hired employees to manage day-to-day business operations, long-term strategy will be more relevant (R) to your goals. You can check progress against revenue targets monthly and quarterly, instead of daily and weekly (T), and you might start thinking about annual milestones for retiring or passing down the business to a family member.
Not-SMART maintenance goal: I want to maintain revenue so I can keep saving for retirement.
SMART maintenance goal: To maintain our revenue, we must win 50 new customers each quarter to replace the ones we lose. This will allow me to save $25,000 per year for retirement.
SMART Goal-Setting in the Growth Stage
Some growth-minded franchise owners shift into this stage immediately after launch. Others prefer to launch, reach profitability and stay there for a little while, then shift into growth mode. Each approach has its advantages. With the first option, you gain from the upward momentum of a launch. The second option can be a good choice if you launch your business with limited resources, since you can use your profits to create cash reserves for expanding the business later. It’s also a good way to give yourself a breather between periods of intense focus on your business. Whichever path you choose, SMART goal-setting will look different than it does in the launch or maintenance stage.
Growth goals can often be less specific (S) than launch or even maintenance goals, but they must still be measurable (M). Remember, growth is risky. If it goes badly, you may deplete your resources and even undermine the established portion of your business. Quantifiable goals show clearly whether you’re still on track.
When setting growth goals, don’t be afraid to push the boundaries of what you think is attainable (A). Growth goals should not be completely unrealistic, but they should encourage you to stretch yourself. In this stage, your most relevant (R) goals will be the ones related directly to your expansion. Think revenue and new-customer targets or tasks to complete before opening a new location. Check your progress against growth goals frequently–as often as you would during a launch (T). Because this is a high-stakes time, you want to know ASAP if anything is not as it should be.
Not-SMART growth goal: I want to be a multi-unit franchise owner.
SMART growth goal: I want to double our annual revenue within three years. To help achieve this, I will open two new franchises this year.
Excited about starting a franchise but not sure how to reach your goal? That’s where The Empowered Franchisee comes in. Our services are always free, and we’re here to help you break that big goal down into attainable steps. Schedule a call with me or Lauri today to start the journey!
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