Business Objectives 

➢ Objectives? 

goals or targets set by a business. 

➢ Executives? 

managers in an organisation or company who help make important decisions. 

➢ Diversify? 

if a business, company or country diversifies, it increases the range of goods and services it produces. 

FINANCIAL OBJECTIVES 

• Business survival – is a very common objective for a small business. Business survival refers to keeping the business operating for a certain amount of time. Most businesses initially aim to survive their first year. 
• Profit – refers to any money left over after all costs have been taken away from any revenue made by a business. Businesses usually aim to make a profit within the first two years. 
• Sales – refer to an amount of a product or service sold by a business. A business will set a target for how much it wants to sell each month and year. This gives the business a target to aim for and a purpose to what its employees do each day. 
• Market share – refers to the percentage of the market that a business occupies. The market is the industry that a business operates in, for example the fast food industry. An example of an objective for market share might be ‘to have 5% share of the fast food market within a 100-mile radius in the first 12 months’. 
• Financial security – relates to a business being able to afford to pay off all its costs and have enough cash left to survive. It also relates to an entrepreneur achieving a level of income that will allow them to keep the business operating.
  • ➢ Financial return – monetary (money) return 
  • ➢ Profit maximisation – making as much profit as possible in a given time period 
  • ➢ Shareholder – owners of limited companies 
  • ➢ Dividends – share of the profit paid to shareholders in a company 
  • ➢ Profit satisfying – making enough profit to satisfy the needs of the business owner(s) 

Non-Financial objectives 

★ Social objectives are linked to doing things in an ethical or environmentally friendly manner, or having a business whose sole purpose is to meet a social need. For example, an entrepreneur may aim to provide only products that are sustainably sourced or use only solar energy to power their business. 

★ Personal satisfaction relates to an entrepreneur feeling satisfaction that they have created a successful business. It may be that an entrepreneur is able to make a business out of a hobby or personal interest. 

★ Challenge relates to an entrepreneur setting up a business with the intention that making it successful will challenge them or take them out of their comfort zone. 

★ Independent and Control – Control relates to an entrepreneur’s goal of being able to control the business and make decisions about how it is run. These aims and objectives may relate to decisions around what

the business sells, where it buys raw materials from, and how much its product or service is sold for. 

Independence relates to an entrepreneur working for themselves and running their own business. It is also to do with them making their own key business decisions. A desire for independence is a common reason for an entrepreneur to set up a business. 

➢ Automation – use of computers and machines instead of people to do a job 

➢ Economies of scale– financial advantages (falling average costs) of producing 

something in very large quantities 

➢ Revenue – money from the sale of goods and services 

SMART OBJECTIVES 

★ Specific: clearly state what is to be achieved, e.g. increased profits. 

★ Measurable: the desired outcome is a number value that can be measured, e.g. increase profits10%. 

★ Agreed: all staff are involved in discussing and agreeing an aim. 

★ Realistic: the target is possible given the market conditions and the staff and financial resources available. 

★ Timed: the target will be met within a given period of time, eg 12 months. 

Why might objectives change as businesses evolve? 

The goals and objectives of the business are likely to change as it grows and evolves. This is due to the fact that businesses must respond to events or changes in circumstances. Some of the most important examples are listed below. 

• ➔ Market Conditions – businesses operate in fast-paced environments. As a result, they must deal with frequent changes. It may be necessary to set new goals as market conditions change. 

• ➔ Technology – as the rate of technological advancement accelerates, businesses may need to adjust their goals. 

• ➔ Performance – a company’s performance is unlikely to remain constant. Businesses may experience periods of sustained profitability, which may have an impact on their goals. 

• ➔ Legislation – new legislation may have an impact on a company’s mission. Many businesses have become more socially responsible in recent years. 

• ➔ Internal Reasons – the reasons outlined above for a business changing its goals are mostly due to external factors; things that businesses cannot control. However, a company’s objectives may change from time to time for internal reasons. The objectives may change as a result of these circumstances.
  • ★ Large business – a business that employs more than 250 people 
  • ★ Small business – a business that employs fewer than 50 people