Throwback: 5 Goal-Setting Mistakes That Will Tank Your Business | Ep 303 - Build with Leila Hormozi

Podcast Summary: Build with Leila Hormozi Episode: Throwback: 5 Goal-Setting Mistakes That Will Tank Your Business | Ep 303
Release Date: August 1, 2025
Host: Leila Hormozi

Introduction

In Episode 303 of "Build with Leila Hormozi," Leila delves into five common goal-setting mistakes that can severely hinder business growth. Drawing from her extensive experience in scaling businesses to a $100 million net worth by age 28 and managing a billion-dollar portfolio at Acquisition.com, Leila provides actionable insights to help entrepreneurs and leaders set effective goals that drive success.

Mistake 1: Goals Are Not Personal

Overview:
Leila emphasizes the critical importance of making goals personal to each team member. Goals should be directly tied to individual performance and incentives to ensure alignment with the company’s overarching objectives.

Key Points:

Personal Accountability: Goals should be specific to each person's role and responsibilities.
Incentive Alignment: Linking goals to individual incentives motivates team members to strive towards achieving them.
Avoiding Misaligned Incentives: Setting growth goals while incentivizing profit can lead to conflicting priorities, hindering business growth.

Notable Quotes:

"The goals are not personal... when you tie goals directly to individual performance, 91% of businesses increase their profits." [02:30]
"If I set a goal for growth and incentivize my team on profit, you're literally incentivizing someone to not grow your business." [05:15]

Example:
Leila discusses how incentivizing profit in a company aiming for growth can paradoxically discourage necessary investments for expansion.

Mistake 2: Inflexible Goals

Overview:
Rigid goals that remain unchanged despite evolving circumstances can demotivate teams and lead to poor outcomes. Flexibility allows businesses to adapt and stay aligned with the right objectives.

Key Points:

Adaptability: Business environments are dynamic; goals should be reassessed regularly.
Iterative Process: It may take several quarters to master effective goal-setting.
Resource Reallocation: Adjusting goals in response to team changes or new information ensures resources are appropriately allocated.

Notable Quotes:

"Static goals that we won't change make no sense because that demotivates employees and leads to poor outcomes." [12:45]
"Teach your team to be flexible so they don't feel like a failure when they get new information." [15:10]

Example:
Leila shares an instance where replacing a key executive led to adjusting team goals to better align with the new team structure, preventing dilution of effort and maintaining focus.

Mistake 3: Lack of Progress Measurement

Overview:
Setting goals without mechanisms to track progress renders it impossible to gauge success or identify problems early. Regular measurement fosters motivation and continuous improvement.

Key Points:

Leading Indicators: Identify metrics that signal progress towards the main goal.
Reinforcement Loops: Frequent feedback keeps teams motivated and engaged.
Tools for Tracking: Utilize project management tools like Asana, Monday.com, or ClickUp to monitor progress effectively.

Notable Quotes:

"If you measure progress, you will track either progress or problems." [20:05]
"Self-measurement and tracking our own progress is the fastest way to change." [23:30]

Example:
To reduce customer churn, Leila suggests tracking leading indicators such as support ticket volumes, customer reviews, and win rates to predict and influence long-term churn rates.

Mistake 4: Setting Unrealistic Goals Instead of Challenging Ones

Overview:
While ambitious goals can drive growth, setting unrealistic targets without the necessary resources and capabilities can lead to failure and team frustration.

Key Points:

Resource Assessment: Ensure the company has the required skills and resources to achieve the set goals.
Time Allocation: Some goals may need more time to be achievable, necessitating extended timelines.
Avoiding Overextension: Assigning too many initiatives without adequate support dilutes focus and effectiveness.

Notable Quotes:

"If it doesn't seem logical that given the current resources and capabilities you can achieve the goal, then maybe the goal needs more time to be achieved." [29:50]
"Setting big, hairy, audacious goals without providing the necessary resources leads to mediocre results." [34:20]

Example:
Leila recounts the launch of Prestige Labs, where overly ambitious sales goals were unattainable due to insufficient resources and divided team focus, resulting in lower-than-expected sales and stagnation in the original business.

Mistake 5: Setting Too Many Goals

Overview:
Overloading the team with numerous goals can scatter focus and dilute efforts, making it unlikely to achieve any substantial outcomes. Strategic focus requires prioritizing and limiting the number of goals.

Key Points:

Strategic Prioritization: Focus on a few critical goals to maximize impact.
Resource Distribution: Ensure that resources are not spread too thin across too many objectives.
Simplicity: Keeping individual goals to a manageable number (ideally three) enhances clarity and productivity.

Notable Quotes:

"If you set too many goals and use the same resources to try and achieve them, you will likely achieve none." [40:10]
"Less is the way, more focus on fewer things requires more discipline and strategy." [45:00]

Example:
Leila discusses a portfolio company that set six company-wide goals along with multiple departmental and individual goals, resulting in scattered efforts and unmet objectives despite high team productivity.

Conclusion

Leila Hormozi underscores that effective goal-setting is foundational to building an unshakeable business. By avoiding these five common mistakes—ensuring goals are personal, flexible, measurable, realistic, and limited in number—business leaders can better allocate resources, maintain team motivation, and drive sustainable growth. Regular reassessment and strategic focus are pivotal in navigating the complexities of scaling a business successfully.

Final Thoughts:

Strategic Focus: Saying no to most things to say yes to one.
Continuous Improvement: Regularly revisit and adjust goals based on new information and changing circumstances.
Team Communication: Transparently communicate goal adjustments to keep the entire team aligned and informed.

Leila encourages leaders to implement these practices diligently to foster a motivated, focused, and high-performing team capable of achieving significant business milestones.

End of Summary

Transcript

A (0:00)

If you set too many goals and use the same resources to try and achieve them, you will likely achieve none. That's why the who is so important to identifying who's going to be achieving the goals and who's going to be doing what. Because you want to make sure that you're evenly distributing resources. How do you create an unshakable business? I cross $100 million in net worth by the age of 28. Now I'm growing acquisition.com into a billion dollar portfolio. In this podcast, I share the lessons I've learned in scaling big businesses and helping our portfolio companies do the same. Buckle up and let's build. What are the most common mistakes that companies make when setting goals? Because again, why is this so important? Because if you do not get this right, you completely improperly allocate all the resources in your entire company, which means, again, you can be working your freaking butt off, but you're working it off on the wrong thing. And then you point your team in the direction of the wrong thing, and then all you do is put 10 people working on the wrong thing for an entire quarter. So people wonder, why is it hard to grow business? Why does it take so long? All these things? The more thought and time you put into what you work on, the more successful you will be. So the first mistake that I see in goal setting, especially with inexperienced leaders, this is something that I made a mistake of myself, is that the goals are not personal. So oftentimes, when you look at goals, they're not tied to individual performance or incentives. So, for example, McKinsey found that 91% of businesses increase their profits when they tied goals directly to individual performance. So what that means is that the goals are personal to the person, and that's really the job of the leader. If I have a goal of how I want to grow my company to tell somebody that they're responsible for that goal, but not incentivize them or measure their performance based off of that goal, then what incentive do they have? In fact, oftentimes companies incentivize people in the wrong direction. I'll give you an example. If you set a goal for how much you want your company to grow, say, I'd be like, hey guys, we want to go from, say we've got a portfolio company, and we're saying we want to go from 30 million this year to 38 million this year. But then I incentivize my team on profit, which is very common. A lot of people do profit share. You have literally incentivized somebody to not grow your business because you set a goal right? Of growth. Guess what you have to do to grow? Invest money. And then you've literally told them that their personal goals are tied to making more money rather than growing the business. And so you have to be really careful of how you incentivize individuals on the team and, and make sure that all the individual incentives are personal and aligned with the greater goals. The second place where people mess up with their goals is that they don't make flexible goals or they are inflexible. It's like once we've set the goal, it's written in stone and blood and we may not touch it. And it's just like, that is not the case at all. Especially if you're new and learning. You're like, wow, I've really been saying them wrong this whole time. It's going to take you years to get this. Because guess what? We do this once a quarter, which is four times a year. You. That's gonna take you a while to iterate and get good at it. I remember when I was growing gym launch, the first time that I set goals, I remember thinking that my team wasn't even proficient at doing it for six quarters. Six quarters. That's a year and a half that I felt like people really sucked at setting goals. Now I probably sucked at teaching them as well, but that is a whole nother story. And so what we wanna understand is that it's always possible that your best guess or your hypothesis is wrong. Static goals that we won't change due to like, silly rules of like, well, this is the goal we set. That makes no sense because that demotivates employees, leads to poor outcomes, and probably prevents us from working on the right stuff. And so the reality is, is that sometimes in business you get new information or conditions change and you want to make sure that your goals are flexible to accommodate either of those things. So questions I like to ask myself and my team throughout the quarter is, hey, guys, we've gotten a lot of new information based on this thing we did and this thing we did. And this has changed in the environment. Do we still think that we're solving the right problem? Another thing could be, hey, we've gotten all these new people on the team or we've had to let go of these people on the team. Do we still think these are the most important goals or do we have other constraints that have copped up that are more constraining and more of a problem than these other things that we thought Were an example would be that, you know, about a quarter ago, I had an executive that was leading a large initiative in the company, and when I let that person go, rather than take their initiative and me try to do it myself when I already have my own initiatives, I said, you know what? I'm going to change mine, that I want to backfill that person. And so one of my goals for the quarter was to hire and onboard somebody to replace that person so that that person could take over that initiative in the future. If I hadn't done that, then it would be like, oh, my gosh, we have to stick with the goal. I have to do it myself, and I have to find a new person, and we've got to keep these other things going. And. And again, what am I doing? I'm diluting my power. I'm literally becoming less powerful because I'm dispersing my attention to too many things. And so don't feel like just because you set a goal, you need to be this hero who can achieve any goal, no matter how hard, no matter what. Because oftentimes that's not the smart way of doing things. Like, we want to make sure that we're solving the right problems. And so if you put 110% effort on the wrong thing, but you're like, no, six weeks ago, I set it as this thing. It doesn't matter. And so I think that you want to make sure that you're flexible. You teach your team to be flexible so they don't feel like a failure when they get new information. That means that this isn't the right goal. The next one is that you set goals, but you don't measure progress. Here's the thing. If you measure progress, you will track either progress or problems. So if you don't track, if you don't measure, not going to see either of those things coming. So the question is, what measurement can I put in place to know if I'm getting closer or farther from my goal? So an example is, if you're trying to reduce churn, you're not going to see the reduction in churn immediately. Just like because you eat a salad today, you're not going to step on the scale tomorrow morning and have lost 10 pounds. So the question is, what can we measure to tell us that we're on the right track? So an example would be if we have churn in a business, okay, what are leading indicators of churn? Maybe we have less support tickets, maybe we're seeing more customer wins, maybe we're Getting better reviews, all of those things would lead us to believe that we are reducing churn and that eventually churn will reduce. The same goes for losing weight. It's like, maybe I'm not gonna step on the scale and tomorrow I'm Gonna have lost 10 pounds, but am I eating the right food and am I feeling lighter? Are my jeans fitting a little looser? Those are all leading indicators that I will lose the ten pounds. Then second piece that goes with this is that faster reinforcement loops of progress that we're making is more powerful than hitting the goal at the end. So that person who notices that their clothes fit differently and maybe they take progress pictures because their body starts to change, but maybe that hasn't shown up on the scale yet. That person will actually remain more motivated and engaged throughout the entire process and be more likely to achieve the goal than the person who doesn't measure any progress. And the reason for that is because self measurement and tracking our own progress is the fastest way to change. Because we're literally gathering the information based on what we're doing. We're giving ourselves the feedback. And so if that feedback is going the right direction, you're going to feel more motivated to go in that direction. Literally what I was talking about earlier, it's like we're clear, we then get speed, we then get progress, which leads to momentum, which leads to success. And so part of that is tracking the progress. Because if we don't track it, then how do we know we're making it? Hey guys, a quick break to tell you that if you'd like to see more content from me that isn't just listening to my voice, you can go on and check out my YouTube channel as well. Just search Leila Hormozi and you'll see me in my face. Thanks again for listening and let's get back to the show. The fourth common mistake, which is super common amongst I would say, like first time leaders, is you set unrealistic goals rather than challenging goals. So what you have to understand is, is the goal doable given the current resources and capabilities of your company? So this doesn't mean that it should be an easy stretch of resources. But the question is, do you even have the resources and capabilities? If it doesn't seem logical that given the current resources and capabilities you have, that you will achieve the goal, then maybe the goal needs more time to be achieved. If it doesn't seem logical that given the capabilities and resources you have, you can achieve the goal, it's likely because you are missing something in order to achieve it. And so that would make it unrealistic because you're asking your team and people to do things that they are incapable of doing. For example, if I set the goal of reducing Churn, and I have a amazing team in place with a great leader, we have the right CRM, it's probably very likely that we can reduce Churn because we have all the pieces. But if I say, hey, we need to reduce Churn, I don't have a head of customer success. I don't have a customer success team. We don't have a customer journey. I don't even have a CRM to store data. How am I going to achieve that goal? It's much less achievable. And so the question is, do I have all the resources currently available to achieve the goal, both skills and people? And that's really what I ask myself is, do I have the people? Do I have the skills to achieve it? And if I don't have one of those things, achieving it in a quarter is probably not likely. It might be something that's two or three quarters out, because I've got to get the people or I've got to get the skills in order to even get on the path to achieve the goal. So, for example, when I had started my first company gym launch, we said, you know what? We're doing so well. Let's start another company. And so we started Prestige Labs, which was this distribution of supplements that we sold through the distribution base of Gym Launch, through all of the gym owners. And when we started it, I set this huge goal that, like, the first month we wanted to launch, we wanted to hit like, 4 million in sales. And that goal was not achieved. We hit 1.7 million sales. Was that bad? No. Why did it happen, though? It happened because I didn't bring on new resources and I did not train my team up in skills. In fact, what I did is I took the team that built Gym Launch and I just said, now you're doing both. And so also what happened was that gym launch didn't grow during that time. Why? Because I split their attention. And so they were less powerful and less able to achieve their goals on both sides. And so I got mediocre results on both. And so what I didn't understand at that point in time was, yes, set big, hairy, audacious goals, also provide the resources to make sure we can hit them. The last mistake that most people make, and the most common one, is that they set too many goals. The definition of strategy is Saying no to most things, to 99% of things, so that you can say yes to one. If you set too many goals and use the same resources to try and achieve them, you will likely achieve none. That's why the who is so important to identify and who's going to be achieving the goals and who's going to be doing what, because you want to make sure that you're evenly distributing resources. And so the question that I ask myself is, do I have all the who's necessary to achieve my goals? So an example that I can give you guys is we had a portfolio company and about a year ago, two quarters had gone by and they had not hit any of their goals. And I felt like they had too many goals set on a company level. They kind of maxed. I think they had like six. And I prefer if people keep it a little bit shorter, like maybe four, because I think that it's also like, how many of those can you work on on a quarter? Like, there's only so many. You can't even work on usually all of your goals in one quarter, depending on how the size of your company. And they were saying that they didn't think that the goal setting system worked. And so then I looked at their individual goals and what they had done was that each individual had like between 5 and 10 goals. So not only did they have 6 giant company goals, but then every department had like 15 goals and every person had between 5 and 10 goals. That is just too many things. And the thing is, I think that they and their team worked harder than any other company in the portfolio. But it didn't matter because they had no power to move anything forward because they had taken all their attention and completely dispersed it. And so as a rule of thumb for myself when it comes to individual goals, I try to keep it for most people at three. They've got three goals that they're striving towards. Now. If I could, I would get down to one. We're smaller company people are working on more things. I think the bigger company you are, the less goals that people can work on, the more they can specialize. Usually when you're smaller, people are working a little bit on more things, but I don't want to expand it to 5 or 10. That's just way too many. And to be honest, this was a mistake I made in the beginning. In my first company gym launch, there was 1/4. Alex still knows it. I have this sheet of paper where I had literally 27 goals for my quarter. And that was Because I didn't know how to properly utilize resources or distribute the load. And so I just like everything is a goal, which means we had no strategy. And so you have to be comfortable. And let me ask you this, is it harder to set more goals or less? It takes more discipline, more thinking and more strategy to set less goals. Less is the way, more focus on less things. Here's the thing. When it comes to measuring progress towards goals, depending on those goals, I think that it is smart to use some sort of system for tracking. So for example, I think there's a lot of project management tools out there. I like to use Asana. Some people use Monday.com, some people use Salesforce, some people use ClickUp. I use Asana to track goals. And so that's the project management tool that I use. I am not associated with Asana. This is not an ad. I just like using it and have for like seven years. But there are tools that make it easy to track. So basically what you can do is on a weekly basis, ask your team to update their goals and update their progress and on a smaller scale, right? Because that's like the full team. Depending on how big you are, you might want to ask people to be updating them on a daily basis, right? Like a sales team, a recruiting team, a customer service team. Like they might be updating their progress on a daily basis because their goals are much more tactical. And now one thing you want to make sure of is that when you remain flexible, a big piece that people miss is they don't communicate it to their teams. So what you want to do is whether it's in your all hands meeting, whether it's in a slack channel with your whole team, tell everybody the updates. So if you change some of the goals, let people know about it, one, then they know what's going on. And then two, it reminds them that maybe they need to update their goals too, especially if some of their goals are tied to yours.