Whether you are an individual entrepreneur or a team leader in a company, running a large organization within a company, or running the company itself, every year you will need to set goals for the coming year.

How do you do this will depend on your role in the company. Your input and setting goals will be very different if you are an individual entrepreneur versus someone running a team or a larger organization within a company.

Let us start with defining goals for a startup.

Setting goals for a startup company

To do this, I strongly recommend that two people work together. If it is two founders, this is excellent. If there is only one person as a founder, I suggest that they find a friend or relative to help them set goals. Here are the steps.

1. Find a quiet place to work.
2. Locate a large space on a blank wall.
3. Each of you gets a 2 x 2 Post-it pad and a pen.
4. Set a timer for one hour, using the phone is fine.
5. On the right-hand side of the wall the founder writes what they think is the goal for year 1.
6. Turn the turn the timer on.
7. Then on each piece of Post-it write one idea that will help reach the goal. There are no questions or feedback. The idea is to stimulate each other for ideas.
8. When the hour is up, stop.
9. Next start removing the Post-It with the idea of finding the shortest path to the goal on the right hand side of the wall.
10. When you have taken all the items off that are not on what I call the critical path, rearrange them in chronological order in which they must be finished to meet the year end goal
11. Next put dates on each of the Post-it and rearrange them so that the most recent objective is first, then the second and the third until you reach the goal.
12. Transfer this information to a spreadsheet where the first column will be the action items. The second column will be the date by which they need to be done. And across the top, the columns will be labeled by week or month, depending how many tasks need to be accomplished.
13. Please look at this spreadsheet on a regular basis to see how you are coming in reaching your end goal.

I have used this process in the startups I've done, and it has worked very well.

A caution, if there are three or more founders, I suggest you limit this to two people.

Setting goals for a small in-business company or for a unit in a larger company.

For a company already in business, or a unit for a larger one,

goals are set on a financial basis. The starting point for this is the revenue forecast for some timeframe, typically a year. This usually comes from the sales and marketing team.

There are several sets of goals: revenue, expenses and cash flow and profits.

1. Start with defining your revenue goals for the year.
2. Then put the month-by-month revenue financial forecast on a spreadsheet.
3. From these revenue forecasts, subtract the cost of goods sold. This will give you the gross margins (GM). *
4. Using last year's monthly expense reports determine what you expect to be spending on SG&A. Adjust accordingly to new needs to reach goals. **
5. Subtract these monthly numbers from your gross margins.
6. This will give you the monthly profits and cash balance.
7. If both are positive month-to-month, you are in good shape.
8. For those months where the cash balance is negative you will have to build up a cash balance in previous months or have a line of working capital you can draw on.
9. To reach your financial goals for the year based on these financial charts you may have to adjust your sales forecasts to generate more revenue or your expenses forecasts to reduce them.

* Gross margin in $ = Revenue / cost of goods sold

** For individual proprietors or service businesses, your financial projections should be based on billable hours at your hourly rate.

SCORE San Francisco, a resource partner of the U.S. Small Business Administration, provides no-cost mentoring, workshops and educational services to help businesses in the Bay Area (and beyond) grow and prosper. Our organization consists of volunteer mentors, all experienced in entrepreneurship and related fields, including startup, marketing, finance, and more. SCORE mentoring is a no-cost service offered to any aspiring or established owners of a U.S.-based business. To request a Business Mentor, please click on this link to set up a no-cost mentoring session: https://www.score.org/sanfrancisco/local-mentors

* Gary Geschwind is a volunteer business executive with SCORE San Francisco. He is a seasoned leader with expertise in business development, marketing and operations.  At SCORE, Gary counsels a wide range of businesses, from retail stores to high technology manufacturing companies.