Business Aims and Objective

Business Aims & Objectives Aims and objectives help businesses to work towards clearly defined targets. Aims are the goals that a business wants to achieve, and having objectives helps to attain those aims. Financial Aims The aims of a business may be financial or, in other words, motivated by money. Maximising Profit Once established, most businesses will focus on the long-term goal of making as much money as possible. To make a profit, income from sales must be greater than outgoing costs. Survival When a business first begins trading, it will most likely just want to make enough money to break-even. Businesses want to ensure that they have enough money to cover expenses such as bills and staff wages. Maximising Sales Many businesses believe that the best way to achieve greater profit is through greater sales. Increasing sales is also a good way to increase market share. Increasing Market Share Market share is the percentage of a market's total sales earned by a business. To increase market share, a business may invest in marketing activities to attract customers away from its competitors. Achieving Financial Security A start-up will most likely have been funded by external sources such as loans or personal savings. A good long-term goal might be to achieve financial security by earning enough revenue for the business to fund itself. Non-Financial Aims Businesses may also need to consider their non-financial aims. These could include: Overcoming a Personal Challenge Managing a business involves hard work, dedication and taking risks. For entrepreneurs, seeing their business flourish can be one of the greatest rewards. Making Ethical and Moral Decisions Organisations may have aims based on ethical beliefs, such as their attitudes towards the environment and people who are less fortunate. Achieving Personal Satisfaction Running a business can allow entrepreneurs to turn their biggest passion into their dream career. Achieving Independence and Control Being an entrepreneur means having the power to make key business decisions, be your own boss and choose your own working hours. 'Smart' Objectives Objectives provide clearly defined targets that can be used by businesses to measure their success. Therefore, it is vital that objectives are SMART. S - Specific Can you state clearly what you want to achieve? 'We want profits to increase.' M - Measurable Can you measure whether you are meeting your objectives? 'If profits rise by 10%, the target is met.' A - Attainable Is it possible to complete the objective? 'We can do this! Profit increased by 8% this year.' R - Realistic Can you meet the objectives with your current resources? 'The factory has 20% spare capacity.' T - Timed When do you want to achieve your objectives? 'Targets must be met by this time next year.' Why Do Aims and Objectives Differ Between Organisations? Aims and objectives are not one-size-fits-all. Every organisation has a unique set of aims and objectives that are based on one or more of the following factors: Type of Business Ownership A small sole trader is likely to have different objectives than a large public limited company (plc). For example, a sole trader is likely to want to make enough money to earn a good wage, whereas a plc is likely to want to maximise profit for its shareholders. Level of Competition Survival and sales are likely priorities in a highly competitive market, whereas in a less competitive market, a business is more likely to want to maximise profit. Size and Age of the Business A newer, smaller business may simply aim to survive in the first few years, but once established, it may focus on increasing sales and market share. A larger business may focus on growth and profit. Type of Business Not-for-profit and charitable organisations may wish to focus on achieving a social or ethical goal, whereas a for-profit business, such as a supermarket, may focus on maximising profit and growth.