How To Measure Goals

As a business owner, you need to keep tabs on your progress to see your mistakes, correct them, and ensure that your journey is on the right track. Tracking your goals will motivate you, drive you to do better and do more, and bring you closer to accomplishing your goals.

Frameworks like SMART at a personal level and OKR at an organizational level are extremely helpful approaches:

smart-goals — A SMART goal is any goal with a carefully planned, concise, and trackable objective. To be such a goal needs to be specific, measurable, achievable, relevant, and time-based. Bringing structure and trackability to goal setting increases the chances goals will be achieved, and it helps align the organization around those goals.

what-is-okr — Andy Grove, helped Intel become among the most valuable companies by 1997. In his years at Intel, he conceived a management and goal-setting system, called OKR, standing for “objectives and key results.” Venture capitalist and early investor in Google, John Doerr, systematized in the book “Measure What Matters.”

Those tools help to ensure that your goals are clear and attainable. But there are a few other things that you should consider to ensure that you keep moving forward even when you are using those tools.

Table of Contents

Ensure That Your Goals can be Quantified

An immeasurable goal will give no room for evaluation. It is important for your growth and progress that you set goals that you can quantify.

This will foster clarity, and you won’t work in darkness, you know what you want to do, and you know how you want to do it. Then you won’t stray away from the focus.

Therefore, you will be able to tell if your current progress is quick enough to achieve your goals or if you need to intensify your efforts.

Share Your Goals

As an entrepreneur, you are your own boss. You don’t have any superior to hold you accountable for anything or to penalize you when you are lagging.

Hence you work at your pace, you are your own boss, you set all the rules, and you break them all. It is usually very helpful to “employ a boss.”

This means that you should find someone, maybe a fellow entrepreneur, maybe a friend, or family, that you should report yourself to if it is a fellow business owner, even good.

You check in on his progress, and the same is reciprocated to you.

This makes it possible to be accountable to each other, and this will eradicate laxity or laziness; knowing that you need to report to someone and impressing that person will require that you put in more effort to ensure that you do better than the last time, every time.

It is commonly said that two heads are better than one.

This is entirely true in this case, and sharing your goals with someone who will work with you to identify your weaknesses and shortcoming is a great move.

It is important to share your goals and their progress with someone who will be honest with you. Family, friends, and employees may want to remain in your good books.

Hence, they may just pamper you and not tell you the truth about your failures. The goal is to increase your drive and motivation, not to make you even more relaxed.

Appreciate Your Little Wins

You will get to several milestones if you have set objectives for your goal.

If your goal is to get 10,000 new customers in a year, and you have only 4,000 in the sixth month, you will be tempted to scold yourself, beat yourself up, and will even want to return to the drawing board as fast as possible.

You should calm yourself down. The fact that you have even set out to achieve a goal and you are working towards it is an extent of success.

Appreciate your efforts, even if you are behind schedule; appreciate the effort that got you 4,000 out of 5,000. Mark the 6^th month as successful, reward yourself for a job well done. You have definitely spent money, time, and expended mental efforts.

Therefore, taking a few minutes to celebrate these moments won’t hurt. In fact, they will give you a sense of calmness, and you will come back stronger, invigorated for the goal you have set, and you will be spurred to be better.

Nobody can show you appreciation the way you will show yourself. Consider yourself important, celebrate your little wins, and they will lay a foundation for more.

tify your major customers as they are your source of income. In my business experience, I have learnt that “all customers are not equal” There will always be a bias and preferential treatment given to premium customers for being premium.

Identify the customers that drive more sales for you; if your business is a B2B business, you may need to prioritize who to supply and who you need to remove from your supply chain.

Ensure that you aren’t judging these things with your personal bias. You may be too attached to a product or a customer to tell yourself the truth, work with a team, use facts and figures from the data you have employed; your opinion may be distorted, even without you knowing. Biases are normal for humans.

The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman since 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Key Takeaways

SMART Goals and OKR Frameworks: Learn about the SMART goal-setting method and the OKR (Objectives and Key Results) system to effectively set and track clear and attainable goals.
Ensure Quantifiable Goals: Set measurable goals to evaluate progress accurately, maintain clarity, and stay focused on achieving objectives.
Share Your Goals: Find someone to hold you accountable for your goals, such as a fellow entrepreneur or friend, to increase motivation and commitment.
Seek Honest Feedback: Share your goals with someone who will provide honest feedback and help identify weaknesses, avoiding complacency and driving improvement.
Appreciate Small Wins: Celebrate milestones and achievements, even if progress is not perfect, as it boosts morale and motivates further progress.
Identify Major Customers: Prioritize customers based on their contribution to sales and profitability, giving preferential treatment to those who drive more revenue.
Avoid Personal Bias: Work with a team and use data-driven decisions to avoid personal biases that may cloud judgment in business decisions.

KPI	Measurement Strategy
Specificity	Ensure that goals are specific, clearly defined, and leave no room for ambiguity.
Measurability	Establish quantifiable metrics and milestones to track progress and evaluate success.
Achievability	Assess the feasibility of each goal by considering available resources, skills, and constraints.
Relevance	Align goals with the broader mission and objectives of the organization or individual to ensure relevance.
Time-Bound	Set specific deadlines and timeframes for achieving each goal to create a sense of urgency and accountability.
Accountability	Assign responsibility for each goal to individuals or teams who will be held accountable for their achievement.
Sharing Goals	Share goals with a trusted partner, colleague, or mentor who can provide support, feedback, and accountability.
Honest Feedback	Seek honest feedback from those with whom you’ve shared your goals to identify areas for improvement.
Celebrating Milestones	Celebrate small wins and milestones along the way to maintain motivation and acknowledge progress.
Identifying Major Customers	Prioritize customers based on their impact on sales and profitability, using data-driven decisions.
Avoiding Personal Bias	Work collaboratively with a team to make objective and unbiased decisions in business-related matters.

KPI	Formula to Measure	When to Use	Advantages	Drawbacks
Achievement Percentage	(Achieved / Total Goal) * 100%	Measure progress toward any goal	Simple and easy to understand	Doesn’t provide insights into specific issues
ROI	(Net Profit / Investment Cost) * 100%	Evaluate the profitability of investments	Measures financial performance	Doesn’t consider non-monetary benefits
Customer Acquisition Cost (CAC)	(Total Cost of Acquisition / Number of New Customers)	Assess cost-effectiveness of acquiring customers	Helps optimize marketing spend	Ignores customer lifetime value
Revenue Growth	((New Revenue – Old Revenue) / Old Revenue) * 100%	Track revenue increase over time	Directly correlates with business growth	Doesn’t consider profitability or expenses
Employee Engagement	(Number of Engaged Employees / Total Employees) * 100%	Measure workforce satisfaction	Correlates with higher productivity and lower turnover	Subjective and may not capture all factors
Customer Lifetime Value (CLV)	(Average Revenue Per Customer * Average Customer Lifespan)	Assess the long-term value of a customer	Helps in customer retention and pricing strategies	Depends on accurate predictions of lifespan
Churn Rate	(Customers at the Start – Customers at the End) / Customers at the Start * 100%	Monitor customer attrition	Identifies customer retention issues	Doesn’t indicate the reasons behind churn
Gross Profit Margin	((Total Revenue – Cost of Goods Sold) / Total Revenue) * 100%	Measure profitability from core operations	Focuses on core business profitability	Doesn’t consider operating expenses
Net Promoter Score (NPS)	(% of Promoters – % of Detractors)	Assess customer satisfaction and loyalty	Provides insights into customer sentiment	Limited in-depth feedback on specific issues
Inventory Turnover Ratio	Cost of Goods Sold / Average Inventory Value	Evaluate inventory management efficiency	Identifies slow-moving or excess inventory	Ignores seasonality and demand fluctuations
Website Traffic	Number of Visitors	Monitor website performance and marketing efforts	Indicates the effectiveness of online presence	Doesn’t measure conversion or user behavior
Conversion Rate	(Number of Conversions / Number of Visitors) * 100%	Evaluate the effectiveness of sales and marketing	Measures the success of converting visitors to leads	Doesn’t consider the quality of conversions
Customer Satisfaction Score (CSAT)	(Sum of Satisfied Scores / Total Responses) * 100%	Assess customer satisfaction with specific interactions	Provides feedback on specific touchpoints	Limited to a single interaction or transaction
Return on Advertising Spend (ROAS)	(Revenue Generated from Ads / Cost of Ads)	Measure the effectiveness of advertising campaigns	Helps optimize ad budget and channels	Ignores other marketing efforts and touchpoints
Monthly Recurring Revenue (MRR)	(Average Revenue Per User * Number of Subscribers)	Assess the predictability and stability of revenue	Common for subscription-based businesses	Doesn’t consider customer acquisition costs
Cash Flow Margin	(Cash Flow from Operations / Total Revenue) * 100%	Evaluate cash generation and liquidity	Indicates the ability to cover expenses and invest	Doesn’t consider non-operational cash flows
Employee Turnover Rate	(Number of Employees Who Left / Total Employees) * 100%	Measure employee retention and satisfaction	Identifies HR and workplace issues	Ignores reasons for turnover and external factors
Cost per Lead (CPL)	(Total Marketing Cost / Number of Leads Generated)	Assess marketing efficiency in lead generation	Helps allocate marketing budget effectively	Doesn’t consider lead quality or conversion rates
Debt-to-Equity Ratio	Total Debt / Total Equity	Evaluate the financial leverage and risk	Indicates the balance between debt and equity financing	Doesn’t consider short-term debt obligations
Operating Profit Margin	(Operating Profit / Total Revenue) * 100%	Measure profitability from operations	Focuses on core operating profitability	Doesn’t consider non-operating income or expenses