Achieving Goal Clarity

On May 25, 1961, President Kennedy delivered a speech to Congress stating, “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” This speech came less than 3 weeks after Alan Shepard became the first American to travel into space. His Freedom 7 flight lasted only 15 minutes and it did not even achieve orbit. The guidance system utilized IBM’s first generation computer that contained vacuum tubes instead of integrated circuits. Landing on the moon was a clear but lofty goal given the amount of work that needed to be completed in less than ten years. Then, on July 20, 1969, Neil Armstrong became the first man to set foot on the moon achieving President Kennedy’s goal in slightly over eight years.

Setting clear goals and objectives is essential to the success of any business. If goals are not established, there is no clear direction for the business. Without a direction, the company does not operate to its full potential. As a result, a company without clear goals achieves lackluster results and never reaches the moon.

In order to achieve major goals, a series of sub goals should be established that collectively support the major goal. Merely setting a major goal would not result in success without supporting sub goals to serve as a road map in achieving the major goal. For example, attaining a 20% increase in net income may involve such sub goals as a 15% sales increase, 20% productivity increase and 10% overhead reduction. The 15% sales increase may require further sub goals including expanding the product base, adding new customers and increasing sales to current customers. Landing on the moon required a series of space flights labeled the Mercury, Gemini and Apollo to test hardware and develop necessary skills before the final goal could be achieved.

Once goals are established, they must be communicated to the company’s stakeholders (i.e. employees, vendors, customers and various other interested parties) to ensure everyone involved is on board. Obtaining buy-in from stakeholders is critical to success in attaining goals. It would be impossible to achieve a sales increase if the vendor of a key component does not have sufficient capacity to supply the necessary part in sufficient quantities to achieve the goal. The amazing amount of support from Congress and the American people was essential to the success of the moon landing mission.

Case Study

About nine months ago, I met with the owner of a service business. I asked him about his goals and he stated that he wanted to sell the business and retire in five years. However, he had not done any retirement planning. We met with a wealth manager who helped him establish his retirement goals including an amount he needed to net from the sale of his business to provide for his retirement. We estimated the current value of his business and determined we had some work to do. In order to reach the selling price goal, we established a goal to increase EBITDA 20% per year. To accomplish this energetic goal, we determined we needed to accomplish a number of objectives. First, we set a target of increasing sales 15% per year. While his sales were strong, he did not have the staff or resources to work his customer list to schedule repeat business. We located a marketing firm to follow up with past customers and inform them that they were due for maintenance and to schedule appointments. We also determined that the market was ripe for a complementary line of business that his company had provided in the past, but discontinued during the recession. Now there is pent up demand creating a great opportunity to re-enter the market. We set a goal to hire the necessary people and procure the equipment to start operations by the end of this year. Finally, we are studying offering customers a maintenance agreement that would help ensure the customer’s system operated more efficiently and reduce costly service calls. This would switch the company from a service business to a maintenance business which would provide a steadier revenue stream and increase profitability.

As of today, the company’s revenues are up 25% from the previous year and EBITDA is up 30%. The owner is not only thrilled about the results, but he is also re-energized about operating his business. He stated, “I have not been this excited about the business since the day I started it.”  While he had the goal to sell the business and retire, he did not have the clarity necessary to achieve that goal. Goal clarity is one of the most important services B2B CFO® Partners provide to clients. We help clients set goals for their business and establish roadmaps to achieve those goals.

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