No more than three

We know from experience that having more than three goals at a time often overwhelms us. In many cases, the goals are so numerous as to become invisible.

And we know that the company goals should provide guidance to everyone in the company about the actions they should take every day. Everyone should be working every day to achieve the company goals. They can do this only when the goals are crystal clear.

So, we try to stick to no more than three over-arching goals. These are goals that encompass many smaller things, things that may at first seem to be goals in themselves, but really are the means for achieving the goals.

For example, you might at first choose to have separate goals for your revenues, gross profits, overhead expenses, and net profits. We’ve certainly witnessed plenty of companies that did just that. But in most cases, the overarching goal is net profit—you can’t achieve the desired net profit without controlling the revenues, gross profits, and overhead.

To test this assumption, you might ask yourself a question such as this. If I missed my revenue goal, but still achieved my net profit goal (for example, by keeping expenses low), would I be satisfied? Would that be okay? If you answer yes, that’s indicative that net profit is an overarching goal for you. As long as you achieve your net profit goal, you’re happy. Revenues don’t have to hit the target level, as long as you can manage the expenses to reach the desired net profit.

Conversely, if you answer no to the question, that indicates that revenues hold some high importance to your company and that achieving the stated net profit is not enough. This might occur, for example, if you are trying to capture market share—perhaps by lowering your prices to entice your competitors’ customers to buy from you instead. In such a case, your goal might be a specific revenue number, or perhaps you’d have goals for both revenues and net profit.