What Are OKRs and Why Does Your Small Business Need Them?

Individuals and small businesses can attain aspiring goals next quarter using the objectives and key results model. Even companies like Google use the OKR framework to align teams around measurable goals. OKRs don’t displace key performance indicators (KPIs). Instead, they drive powerful outcomes. 

Explore the OKR methodology to learn how to prioritize goals and track progress. Below, we’ll go over the steps for writing OKRs, avoiding common mistakes, and managing updates with tools. 

What are OKRs? Definition and formula

OKR is a collaborative goal-setting methodology. It has two parts: the objective and the key results. The goal should be short and inspirational, followed by two to five quantitative and measurable key results. Business owners use the outcome-driven framework to stimulate growth and boost team engagement. 

While initially developed by Andrew Grove, the Co-founder of Intel, Venture Capitalist John Doerr introduced the concept to Google. Doerr's OKR formula is simple:

I will (objective or what you want to improve) as measured by (this set of key results or how you'll know if you've achieved your goal).

OKR framework explained

The top small business planning strategies are structured to deliver specific results. In this case, writing OKRs aligns employees and teams around shared, overarching goals. Each group does its part, moving the needle toward success, without repetitive work or wasted resources. 

The OKR goal-setting technique has a few crucial components, including:

• Objectives: Actionable, concise goals focused on ambitious improvements.
• Key results: Measurable, aggressive yet realistic outcomes that are easy to grade.
• Team goals: Manager, team, and employee objectives that align with shared OKRs.
• Initiatives: Plans or projects that will help you reach your goals.
• Weekly check-ins: Monitor progress toward your objective regularly.
• Quarterly improvements: Meet around three outcome-focused OKRs per quarter.

OKR examples for small businesses

OKRs tie into quarterly and yearly planning, making them a good addition to your long-term and short-term goal-setting strategy. High-level OKR goals should motivate and inspire team members. Key results add measurable context to your objectives. 

Consider these small business OKR examples:

• OKR 1: Grow website traffic to bring in more leads and sales this quarter by increasing organic search traffic by 15% and social media traffic by 25% while creating three high-performing content pieces that generate steady monthly traffic.
• OKR 2: Make onboarding faster and smoother so new customers stick with us by cutting onboarding time from three days to one day, raising satisfaction rates from 70% to 90%, and reducing onboarding issues by 50% based on support requests.
• OKR 3: Predictably increase sales to boost stability this quarter by acquiring 50 new high-value clients, raising the average contract size by 15%, and improving the close rate by 20% compared to last quarter.

How to write measurable OKRs: step-by-step

Setting clear objectives and key results helps team leaders and employees develop actionable plans. But the OKR framework is collaborative. It works best when you get feedback from teams during the OKR process. Follow these steps to write effective OKRs. 

1. Identify what matters most before writing OKRs 

For examples of OKRs for your business, think about what you want to achieve next quarter or year.  Consider the factors that would most impact operations or financial health. Drill down on why these actions matter and why now. Narrow your list to about three priorities, at most five.  

Brainstorm OKRs by asking:

• What’s most important for us to get done?
• If we tackled just one, which one would make the biggest improvement?
• What do we need to fix or update from where things stand now?

2. Set objectives

Now, you can convert your top priorities into actionable, inspirational objectives. Each goal should be easy to understand and act on for everyone in your company while defining success clearly and concisely. 

Consider the following OKR example for a small business:

• Specify a broad goal: Strengthen the business to withstand a potential recession.
• Clarify your approach: Build a three-month recession buffer by putting more cash aside, making sales more consistent, and cutting unnecessary costs.
• Make it inspirational: Become recession-ready by building the strongest financial and operational foundation our business has ever had in 90 days. 

3. Write key results

After you have the big picture, decide how you will measure progress. Key results spell out the outcomes that will strengthen your business, not the tasks you plan to do. If your KRs use words like “review,” “meet,” or “analyze,” you’re listing activities, not results. Use the SMART goal methodology to ensure each KR is specific, measurable, achievable, realistic, and timely. 

From the OKR example above, here are a few key results for recession-proof business planning:

• KR1: Increase cash reserves by 15% through faster invoicing and upfront payment options.
• KR2: Cut monthly discretionary expenses by 10% without reducing services or quality.
• KR3: Add one new recurring revenue stream generating $500 to $1,000 monthly.
• KR4: Decrease project turnaround time by 20% by automating workflows.
• KR5: Improve customer retention by 5% with loyalty or subscription offers. 

4. Get feedback and refine OKRs

Step back from the OKR process and get a fresh perspective from managers and team members. Ask for input to ensure the wording and measurement methods make sense to everyone. Sometimes revising the phrasing improves clarity, making OKRs more effective. Confirm that each OKR contributes to broader company goals and is quantifiable. 

5. Implement OKRs

Implementing OKRs successfully allows leaders to adjust their style for ambitious business goals and develop team initiatives to achieve big wins. Post your OKRs in a central location and establish a system to track and visualize progress.

A small company with a few onsite employees may use a free OKR template or spreadsheet and not need separate team OKRs. However, goal management software or collaboration tools help hybrid workforces align goals across sales, engineering, and finance teams. 

Consider the following tips when implementing OKRs:

• Make sure progress and updates are transparent: OKRs should be accessible to everyone, so choose a system that works for employees across different locations.
• Establish a check-in schedule: Meet weekly, biweekly, or monthly to discuss progress and challenges.
• Assess and score OKRs: After an OKR cycle, evaluate your progress by assigning a score to each key result. Generally, OKR scoring uses a 0-1 scale, where 0 means no progress, and 1 equals 100%. 

Common mistakes in setting OKRs (and how to avoid them)

Avoid these common OKR mistakes when writing objectives and key results: 

• Not understanding the difference between OKRs and KPIs: While KPIs track business as usual, OKRs help you accomplish transformational goals.
• Creating a checklist instead of key results: KRs should focus on the outcome rather than individual activities.
• Writing OKRs that miss the mark: Find the sweet spot between being too easy and too ambitious to achieve, so teams stay motivated without getting burned out.
• Setting OKRs in stone: OKRs should be relevant and timely, so allow for flexibility to adjust targets or initiatives if your business circumstances change.

Tools to manage OKRs

The best OKR software and tools help small businesses communicate priorities and visualize the big picture. Many project management systems offer free OKR templates or spreadsheets to record goals and track progress. Some offer whiteboards and goal-tracking dashboards. Consider using apps like Asana, Wrike, or ClickUp to automate check-ins and progress updates or improve virtual collaboration. 

Alternatively, goal-management software, like Weekdone, Perdoo, or Profit.co specialize in the OKR framework. These systems often integrate with productivity software and provide robust OKR reporting and analytical dashboards.

Top benefits of OKRs

OKRs benefit small businesses by improving team productivity and engagement. Research consistently shows that employees who find purpose in their work are more motivated and engaged. The OKR process involves teams in goal-setting, connecting their work activities to meaningful business objectives. According to Gallup, engaged employees are less likely to call in sick and more likely to experience higher well-being.  

There are many other advantages to creating OKRs, and the acronym FACTS sums it up:

• Focus: OKRs answer the question, "What is most important for the next three months?" The objectives and key results are short, one-line thoughts.
• Alignment: OKRs align with your company vision and pull your teams together with a purpose while allowing them to concentrate on meeting their key outcomes.
• Commitment: OKRs require dedication at all levels, including adjusting resources to support individuals and teams.
• Tracking: It's easy to monitor OKR progress using the metrics (key results). Pull weekly or monthly reports to assess improvements.
• Stretching: Achieve more than you thought was possible by including at least one stretch goal that challenges your team to go above and beyond. 

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