Goal Setting: OKRs, KPIs, and What Actually Drives Action

The Problem With Most Business Goals

"Grow revenue." "Get more customers." "Be more profitable." These aren't goals. They're wishes. A goal without a number, a deadline, and a plan is just something you hope happens.

Small business owners often fall into one of two traps: either they set no formal goals at all (running on instinct), or they set so many goals that none get real attention. Both lead to drift.

Frameworks Worth Knowing

KPIs (Key Performance Indicators)

KPIs are metrics you track regularly to understand business health. They're not goals themselves; they're the gauges on your dashboard.

Good KPIs for a small business:

• Revenue per employee -- tells you about productivity
• Gross margin -- tells you about pricing and cost control
• Customer acquisition cost -- tells you about marketing efficiency
• Close rate -- tells you about sales effectiveness
• Average job value -- tells you about your customer mix
• Cash on hand in days of operating expenses -- tells you about survival

Pick 5-7 KPIs. Track them monthly. When one moves in the wrong direction, that's your signal to investigate.

OKRs (Objectives and Key Results)

OKRs come from Intel and were popularized by Google. The structure is simple:

Objective: A qualitative goal. What you want to achieve. Key Results: 2-4 measurable outcomes that prove you achieved it.

Example:

• Objective: Become the go-to plumbing contractor in the west side market
• KR1: Increase west side revenue from $180K to $300K by Q4
• KR2: Achieve 50+ Google reviews with 4.8+ average rating for west side jobs
• KR3: Secure 3 property management contracts west of the river

OKRs work because they connect ambition (the objective) to measurable evidence (the key results). They also force you to define what "success" actually looks like.

SMART Goals

The classic framework: Specific, Measurable, Achievable, Relevant, Time-bound. It's simple but effective for operational goals.

Bad: "Improve cash flow." SMART: "Reduce average accounts receivable from 45 days to 30 days by June 30 by implementing deposit requirements and automated payment reminders."

Choosing the Right Framework

Don't overthink this. Here's a practical approach:

• KPIs for ongoing health monitoring (track monthly, forever)
• OKRs for quarterly strategic priorities (3-4 per quarter, max)
• SMART goals for specific projects or changes (as needed)

For most small businesses with under 20 employees, you need 5-7 KPIs on a monthly dashboard and 2-3 OKRs per quarter. That's it. The SBA recommends keeping your planning simple and action-oriented for exactly this reason.

The Cascade Problem

Here's where bigger companies go wrong and small businesses can get it right: alignment. In a large corporation, goals cascade from CEO to VP to Director to Manager, and by the time they reach the people doing the work, nobody knows why they're doing what they're doing.

In a small business, the owner sets goals and works alongside the team to hit them. Use that advantage. Share your goals openly. Explain the reasoning. When your crew understands that the goal is to reduce callbacks by 50% because each one costs $400, they'll start doing better quality checks on their own.

What Actually Drives Action

Goals only drive action when three conditions are met:

1. Visibility

If goals live in a spreadsheet nobody opens, they're worthless. Put your top 3 goals on a whiteboard in the office. Review them at every team meeting. Make them impossible to forget.

2. Accountability

Every goal needs an owner. "We need to improve our online reviews" is nobody's job. "Maria is responsible for sending review requests after every completed job, and we're tracking the count weekly" is someone's job.

3. Consequences

Not punishment. But there need to be real outcomes tied to hitting or missing goals. That might be a team bonus, a celebration, or simply the honest conversation about what went wrong and what changes.

Setting Goals You'll Actually Hit

Start with your current baseline. According to Census Bureau data, the average small business in construction and services grows revenue 3-5% annually. If you're setting a goal of 50% growth, you'd better have a specific plan for how you'll achieve 10x the industry norm.

Ambitious is good. Delusional is expensive.

Work backward from your annual target:

• Annual revenue goal divided by 12 gives you monthly targets
• Monthly targets divided by average job value gives you jobs needed
• Jobs needed divided by your close rate gives you leads required
• Leads required tells you what your marketing needs to produce

Now you have a goal that connects to daily action.

Review and Adjust

Set goals quarterly. Review progress monthly. Adjust when reality changes your assumptions. A goal set in January based on certain material costs might need revision in March if prices spike 20%.

The discipline isn't in setting perfect goals. It's in consistently measuring, discussing, and adjusting. The businesses that grow are the ones that pay attention.