Starting a Business — Personal & Business Goals
Knowing the goals for starting your new business is critical to your success. If you lose sight of why you started that business, you won’t achieve what you wanted to and your drive to carry on will die off.
In my previous story on Starting a Business — Things You Should Know, this was the first of the important things to know when you embark on your new business adventure.
There are a number of common reasons for people to start their own businesses, and these reasons are powered by their personal goals. Once the business is up and running however, often the goals of the business then take over and the personal goals are forgotten — and that is when the dream dies.
In future stories, I’ll look at covering some of the specifics around common reasons to start your own business, but the thrust of this story is to dig a little deeper into the nature of personal & business goals to help you keep your new business on track.
Definition
First & foremost, it is essential to distinguish the difference between your personal goals & your business goals.
Your personal goals are the reasons that you decided to start a business in the first place. These are the goals that will genuinely get you out of bed in the morning. These are the goals that will keep you excited about the business you have started. And more important than anything, these are the true reasons why you have a business at all — so if you can’t fulfil them, why are you even bothering? Running a business of any kind is tough, so make sure the rewards are there in whatever form matters to you.
Your business goals exist to provide for your personal goals. They are the means to an end and should always be viewed that way. And if you liken it to a salaried position, this becomes significantly more obvious. Getting a pay rise is exciting because of what it enables you to do with that money — not because you merely “have” more money. Getting a promotion is exciting because of the recognition you receive from your colleagues — not because you now have “Senior” at the front of your job title.
So whilst there is an unquestionable link between your personal & your business goals, don’t lose sight of which is the cart and which is the horse!
Short-term Goals
As you start to plan out your new business venture, there will be one particular short-term personal goal that stands out above all others — financial survival. If like many others you are leaving a stable, salaried role to set out on your own, your biggest fear will be that the lifestyle you are accustomed to will have to take a backwards step to get your business off the ground. Or worse, that you risk not being able to cover your basic costs like mortgage, rent or utilities.
So before you take the leap and hand in your notice, make sure you understand a couple of key numbers:
- How much does your current lifestyle cost per month, exclusive of any costs that are intrinsic to your current job (i.e. commuting costs)?
- How much could you reduce your lifestyle costs to in the short-term to make ends meet if you had to?
When doing either of these calculations, be sure to look back over at least the last 3 months’ expenditure, and 12 months’ worth if you can — that of course relies on you having no significant cost changes over the last 12 months (new house, for example!), but the more data you can take in, the better the average cost per month you can calculate.
Calculation 1 should provide the ideal starting amount of money that you need to draw from your business. No-one wants to take a step backwards in real income, and if you remove commuting costs, you may be surprised at how much your current lifestyle cost reduces by.
Calculation 2 is then your worst-case scenario. Think of all the things you would (not just “could”) cut back on if you had to and then you have a fall-back plan. Ideally you would have a certain amount of savings to live on for the first few months so that you never have to action this plan, but we all know that the world doesn’t always present us with the ideal scenario!
Now that you know what your personal costs are, you can look again at your business plans and work out just how successful you need to be in order to take the money necessary to maintain your current lifestyle, or merely tread water in the short-term.
And by doing that, you’ve now defined your immediate short-term business goals.
Medium- & Long-term Goals
In the pre-trading days of your business, it might feel a little difficult to work out how you are going to achieve these or indeed exactly what they should be, but in essence the questions to ask are these:
Medium-term personal goals: What are the reasons you are looking to start a business in the first place?
Long-term personal goals: By what means are you intending on leaving/exiting your business?
As briefly outlined in my previous story, medium-term goals could mean many things to you, but once you are over the initial goal of survival, it is critical to the longevity of your business that you revisit these reasons. They are the ingrained, deeply personal, individual drivers that you have for this business, and neglecting them will leave you feeling as trapped as by your own business as you felt in your salaried work.
And please don’t kid yourself that your sole reason for setting up a business is for the good of your customers, clients or partners — whilst these elements are important to a business plan, and indeed to your business goals, making other people happy is not why you are taking these risks. You do have your own personal goals for which your business is your vehicle to achieve them, and if you can’t be honest with yourself about them, you’ll never be happy with what your business delivers however successful it may be!
For the long-term, this can seem like a world away — after all, you haven’t even established a business yet! But there are very few people in the world who would want to be working in their business until the day they die, so an exit of sorts is always the endpoint and therefore it cannot be neglected.
So take a look at the industry you are entering and consider what would be your ideal exit as there are a multitude of options — acquisition by a bigger company, sell to your employees, appointment of an MD to run the business on your behalf, etc. etc. And also consider what is actually realistic within your industry too — in mine, acquisitions are only around 1 in 1000 each year, and therefore I consider this to be mathematically unlikely.
To achieve medium- & long-term personal goals, you will need to put the right business structures in place — and knowing that that is what is ahead, you can now construct the appropriate business goals around them. By their very nature, these goals will not be achieved overnight, but the sooner you can start making steps towards them whilst minimising any immediate risk to your business, the better. Not only will it lead you personally closer to what you want to achieve, but each step, however small, will give you that boost in confidence that you are heading somewhere.
By starting a business, you will place yourself at the centre of the personal goals of many other people. It may be your partner, your future staff, your future clients & customers and even your wider family, and all of this is part of the tacit agreement that you make when you choose to take on the undeniable responsibility of running your own business.
But to keep alive that dream-like moment you had when you first realised that you could be your own boss, your personal goals will be absolutely critical. Lose sight of those, and that dream will quickly become a nightmare from which it is very difficult to escape.