Defining a good goal is hard enough in itself, but people still fail even with well thought out SMART goals. Why? The answer is simple: they fail to turn these goals into actions. Generally, a goal is broad and it is hard to identify ways to achieve it. To transform your goals into practical actions is to keep asking the question “How”, until you have a atomic and manageable set of actions that can directly and effectively impact the outcome.
An Example of Turning Goals Into Actions
Let’s take a theoretical media business that thrive on advertisement and paid subscription revenue. The business has the following high-level goals:
- Increase Revenue
- Reduce Costs
As you can see it’s a little hard to think of something practical we can do to impact these high-level goals. And if we fail to break it down into smaller chunks, we may end up doing unproductive activities like obsessively going over the data looking for trends, having meetings about why the revenue is flat, etc.
Let’s take a look at just the first goal and ask how can we increase revenue?. Our next set of sub-goals may look something like this.
- Increase circulation size (e.g., number of subscribers, number of copies sold, etc.)
- Increase number of advertisers
- Increase revenue per advertiser
- Increase revenue per subscriber, or per copy sold
- Increase revenue per publication
As you can see, each sub-goal is more specific than the original goal. However, we can still continue ask “How” and make it even more actionable.
Let’s take a look at the first sub-goal, and ask how can we increase the circulation size?
- Increase marketing and advertisement spending — e.g., to build brand recognition and demand
- Lower subscription cost — e.g., to increase value and make the purchase more attractive
- Lower cost per copy
- Broaden the scope within the niche — e.g., turning a magazine about dogs into one that’s about pets
- Improve distribution channels — e.g., sign up new retailers to carry the magazine, expand into neighboring regions, etc.
- Expand into other media — e.g., expand from hard-copy publication to web-based publication
I think you can see where I am going with this. Notice that each time we ask the question “How”, we make a goal more actionable, and the actions to accomplish it more defined and productive. In essence, we are building an upside down tree as illustrated below.
Applying the Principal to Personal Finance
How can this business concept be applied to personal finance? Well, let’s take a look at a common goal:
- Securing a comfortable retirement
How are we going to secure a comfortable retirement? By definition, retirement means we have enough income to cover our living expenses so we don’t have to work, therefore:
Take it a step further…
- Build passive income
- Invest in the stock market
- Invest in side businesses
- Social Security
- Reduce expenses
- Eliminate debt — this also eliminate all the interest payments
- Frugal living
- Find lower cost alternatives to products and services that you need
Let’s zoom in on “Invest in the stock market”
- Invest in the stock market
- Set up 401(k) plan
- Open a Roth IRA account
- Learn to invest
- Save money for investing
You can keep drilling down until the high-level goal become actionable.
There you have it, the basic principal of turning high-level goals into productive actions.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.