Business Goals vs Product Goals and Tips to Setting Both

In our previous article within the OAK'S LAB WAY series, we emphasized the significance of clear mission and vision statements. While it's essential for startups to have an inspiring purpose and aspiration, founders need a tangible way to measure progress towards their ambitions.

This is where business and product goals come into play. Often times founders come to us with poorly defined or even non-existent goals for their business and product. Common examples of misguided goals we've seen:

• “Release the product”
• “Integrate with a payment processor” 
• “Build a mobile app”

Though these objectives are important for product teams, they are output-based rather than focused on the overarching outcomes crucial to the startup's success. By identifying outcome-based goals first, some output-based goals may become irrelevant as more efficient solutions can be found to achieve the desired outcome.

Especially for early-stage startups with limited resources and short runways, it is crucial for product teams to stay focused on a limited amount of goals and prioritize the most impactful tasks that contribute to achieving them. In this article, we will delve into the differences between business and product goals, how we implement them at OAK'S LAB, and share some valuable tips from our experience building 35 startups.

What are business and product goals? 

Business goals are set at the organizational level and are aimed at achieving the overall mission and vision of the startup. They are broader in scope and cover all aspects of the business, including products, services, customers, employees, finances, and operations. These goals are typically long-term and drive the strategic direction of the company.

Product goals are product-specific objectives that focus on improving the product's value, quality, and customer satisfaction. They have a shorter time horizon and drive the tactical direction of product development efforts.

In early-stage startups, business and product goals may be identical to avoid unnecessary complexity. However, as startups mature, business goals set the overall direction and strategy, while product goals focus on particular product-specifc objectives. Both types of goals are important for a startup's success and should be aligned and coordinated to ensure progress towards the mission and vision.

How we use business and product goals at OAK’S LAB

At OAK'S LAB, our priority is providing a framework that ties all product development efforts to positive outcomes for the startups we work with. Clear goals help us stay efficient by prioritizing and maintaining our focus on the most impactful tasks.

Therefore it is crucial for us to make sure that on every startup project we are part of, we have clear goals that we are aiming to achieve. These goals then help us prioritize ruthlessly when we are scoping out new features and keep our team focused on the main thing. 

We require all goals at for our startup projects to be SMART:

• Specific (simple, sensible, significant)
• Measurable (meaningful, motivating)
• Achievable (agreed, attainable)
• Relevant (reasonable, realistic, resourced, results-based)
• Time-bound (time-based, time-limited, time/cost limited, timely, time-sensitive)

Business Goal Example: Achieve $1M in ARR within the next 18 months

This example has been taken from one of our seed-stage startup clients that was focused on increasing their ARR in order to raise their next funding round. 

• Specific: We want to get to $1M in ARR by increasing SME (small and medium-sized enterprise) customers and enhancing the product with their ‘must have’ features.
• Measurable: We’ll measure progress by monitoring the Stripe dashboard and tracking revenue progress month to month. 
• Achievable: We will achieve this by investing in our sales team to increase our pipeline of SME customers and enhancing our product to meet the demand of SME customers.
• Relevant: We need to get $1M in ARR in order to unlock the milestone of our next funding round.
• Timebound: We aim to achieve this within the next 18 months.

Product Goal Example: Reduce the average contract review time by 50% within 3 months

This example was taken from one of our pre-seed stage startup clients that was building a product to streamline the process for legal professionals to review contracts. 

• Specific: We want to reduce the time it takes users to review contracts from an average of 40 minutes to 20 minutes. 
• Measurable: We’ll measure the success by conducting user testing where we will measure the time it takes users to review the contract.
• Achievable: We will invest in design and engineering velocity towards accomplishing this goal.
• Relevant: Achieving this goal will solve a user pain point from our user interviews and make the product more sticky for end users.
• Timebound: We want to achieve this within the next 3 months. 

Tips for business and product goals

1. ‍Start with the big picture and work backward. Break down the mission and vision into specific, actionable goals using techniques like Backward Goal Setting.
2. ‍Stay agile. Early-stage startups evolve rapidly, so consider shorter time horizons for goals. Break down larger goals into smaller goals to monitor progress effectively and potentially adjust course.‍
3. Keep it simple, stupid. The fewer goals the better. We’ve seen our startups be very effective with only a single goal, but try not to go above 5, as you’ll then need to be constantly prioritizing between these goals.‍
4. Make goals measurable. Ensure there is a clear way to determine success. We recommend using the SMART goals framework (Specific, Measurable, Achievable, Relevant, and Timebound).‍
5. Focus on revenue. As an empowered product team, it is crucial to consider the financial value the product brings to a startup. Be mindful of the startup’s financial projections and align goals accordingly.‍
6. Be aware of funding milestones. For many startups, funding rounds are tied to milestones in revenue or user numbers. Understanding these milestones is vital, as reaching them may determine the startup’s survival.‍
7. Utilize metrics. After product launch, leverage data to create and refine product goals. Data-driven decisions help in setting achievable and realistic objectives.
8. Think about profitability. Ensure that some of your goals directly address profitability. This can include optimizing operational efficiency, reducing costs, improving pricing strategies, or increasing sales through marketing and customer retention. By keeping profitability at the top of your mind, you’ll ensure that your startup remains financially healthy and sustainable, allowing for long-term growth and success.

In conclusion, setting effective business and product goals is a crucial aspect of driving early-stage startups towards success. By focusing on outcome-based goals, founders can ensure their teams remain focused on high-impact tasks that contribute to achieving their overarching ambitions.