Clear business goals and effective ways to measure progress are the key to a successful business. Without them, it can feel like you’re trying to navigate without a map.
Business leaders often run into the same problem when thinking about business growth: they know they want to make progress, but they don’t know what “progress” looks like… or how to achieve it.
That’s where key performance indicators (KPIs) come in. KPIs transform big-picture goals into actionable metrics and enable businesses to track their progress effectively.
In this blog, we’re giving you the essential guide to setting goals and KPIs that actually make a difference.
Why setting goals is essential
There’s a huge difference between working towards a vision and working towards a concrete goal.
Without clear goals, it’s impossible to know if you’re putting your effort into the right places. A lack of direction makes it harder to prioritise tasks, track progress, and make sure your team members are making the most of their time.
It’s not just the risk of slowing progress down – there’s a chance you’ll end up backtracking and find your business in a worse position than it was before.
Setting clear, measurable goals is the best way to make sure your efforts add up. Effective goal setting helps you to:
- Align priorities across teams and departments.
- Identify signs of progress and celebrate successes.
- Measure progress and adjust your overall business strategy in response.
How to set effective goals
Choosing the right goals for your business requires a fair amount of time, effort and consideration. Being too vague or over-ambitious when setting goals doesn’t help your business – it can damage your overall strategy and make it harder for you to pivot further down the line.
Here are a few key strategies for setting effective goals.
Look at your long-term strategy
When setting goals, it’s important to take a step back and look at the bigger picture. Your business’ long-term strategy is a great place to start.
As part of your long-term strategy, you should have an idea of where you want your business to be in the next five to ten years. Work backwards from that point: what do you need to do today to reach that goal in the future?
Thinking about your long-term plans helps make sure every goal you set has a reason behind it. If short-term goals don’t contribute to your future business plans, ask yourself if they’re worth keeping.
Identify your priorities
Whilst it can be tempting to dive into the deep end and focus on quick wins, it’s worth investing some time to identify your priorities.
Prioritising isn’t just about deciding which of your goals is the most important. It’s about understanding what needs to be done now for progress to happen later.
Look for problems or bottlenecks that might slow things down in the future, and make it your first goal to address these issues before they arise.
Involve your wider team
From day one, you should treat your business goals as a joint effort. Collaborating across departments can offer new perspectives and identify any blind spots.
With a clear end-goal in mind, your team will have a better understanding of how their work makes a difference. This can help motivate and direct your team in their day-to-day work.
Set clear expectations
When things get busy, it’s easy for day-to-day responsibilities to take over and push goals to the sidelines. Setting clear expectations from the start can help overcome this, creating accountability and avoiding confusion later on.
Figure out who ‘owns’ certain responsibilities, plan out key deadlines in your calendar and set up regular check-ins to track progress. This helps your goals stay on track during busy periods and keeps everyone aligned on what needs to be done.
SMART Targets
Using the SMART framework is a great way to set actionable business goals. Here’s how it works:
- Specific: Goals should be clear and unambiguous. Instead of saying “increase sales”, say “increase sales of Product A by 20% in Q1 2025.”
- Measurable: Include metrics to track progress. This is where KPIs come in – more on that shortly!
- Achievable: Goals should challenge your team, but remain realistic.
- Relevant: Make sure goals align with your wider business strategy.
- Time-bound: Set deadlines for when you will achieve your goal to create accountability.
Why you need KPIs
KPIs are measurable values that track a business’ progress towards their goals. They can be used to evaluate performance over a period of time, assess the success of different strategies, and identify areas for improvement.
As well as improving performance tracking, KPIs increase accountability and focus. When working towards clearly defined KPI targets, team members have a better understanding of their role to play in meeting company-wide goals. This also often leads to more motivated teams!
Finally, KPIs significantly improve decision-making. KPIs provide business with accurate data, supporting leaders to continuously evaluate performance and look for ways to improve.
A quick guide to setting KPIs
When setting KPIs for your business, it can be difficult to know what metrics to focus on. Our guide covers everything you’ll need to know to make choosing, setting and tracking KPIs work for your business.
What makes a good KPI?
Not all KPIs are made equal!
When choosing KPIs, it’s important to avoid common pitfalls like focusing on vanity metrics (e.g. social media likes that don’t translate to business outcomes) or setting too many KPIs, which can weaken your efforts.
Effective KPIs will meet all of the following criteria:
- Actionable: It directly informs decisions.
- Relevant: It aligns with your business goals and priorities.
- Measurable: It can be quantified and tracked over time.
- Accessible: It’s easy to understand and communicate to stakeholders.
- Time-sensitive: It provides timely insights to guide strategy.
Choosing the right KPIs
KPIs will vary depending on your overall business goals. Here are some common types that you might want to consider:
- Financial KPIs: Revenue growth, profit margin, cost per acquisition.
- Operational KPIs: Production efficiency, order fulfillment time, defect rates.
- Customer KPIs: Customer retention, Net Promoter Score (NPS), average response time.
- Employee KPIs: Employee satisfaction, turnover rates, training completion rates.
Successful KPIs will be closely related to your business objectives – and you’ll need to make sure you pick metrics that matter.
Choose indicators that accurately track progress towards your goals. If your goal is to improve financial performance, a metric like profit margin or revenue growth rate should be your go-to KPI.
Making the most of your KPIs
Once you know what metrics are important for your business and what a good KPI looks like, it’s time to utilise them. KPIs that you set and never look at again aren’t going to help your business grow!
Here are some ways you can make the most of your KPIs.
Make it practical
A KPI should help your decision-making, not just sit in a report. Every metric should have an action that follows it. For example, if your KPI is “cost per acquisition,” use it to pinpoint what works well and what could cut costs.
Review regularly
Business conditions change quickly. If needed, your KPIs should evolve with your business conditions. Check in with KPIs monthly or quarterly to make sure they still align with your goals, and are working to effectively track your progress.
Make sure you use the right tools to track KPIs. Analytics platforms and project management tools can make tracking progress much simpler (and less time consuming!), letting you focus on taking action.
Align goals and KPIs across teams
As we mentioned earlier, it’s essential that you make sure everyone in your business is on board with the same goals and KPIs.
Teams will need to prioritise different metrics based on their day-to-day activities, but all KPIs should contribute towards the same goals.
Communicate how each department’s efforts contribute to the bigger picture to help boost motivation and create a sense of unity. And don’t forget collaboration – cross-functional teams can work together to tackle shared KPIs.
Need help setting goals and KPIs?
We’ve created the essential guide for planning your 2025 business strategy. In the guide, we cover goal setting, forecasting, strategy sessions and more.
You can download the 2025 Business Strategy Guide today.
If you have any other questions, get in touch with us today – we’re here for all your business strategy needs.
