In this video were going to cover what business aims and objective are and some common financial
and non financial aims.
What are business aims and objectives.
The first thing that is important to understand is the difference between aims and objectives.
A business aim is the overall target or goal of the business, whereas business objectives
are smaller targets which help meet that overall aim.
The aim is a destination on a map and the objectives are the roads you will take to
get to that destination.
Businesses create aims and objectives to give them a purpose, to give them a target to work
towards.
A business may have several different objectives that will help it to meet an aim.
For example an aim of a small business selling candles may be to generate 60 thousand pounds
of revenue in 2021.
However this aim can comprise of many objectives help to reach the overall aim.
Such as; To increase sales of the bestsellers by 20%
To increase Facebook marketing by 5 thousand pounds in October and November to increase
Christmas sales.
Develop a new candle range to boost sales during the quieter months of January and February.
To sell candles at local farmers markets to increase revenue over Christmas.
These objectives feed into the overall aim of generating 60 thousand pounds of revenue
in 2021.
Aims and objectives can be a mixture of financial and non-financial aims.
Lets have a look at some financial aims.
Financial aims and objectives Most businesses are set up to make money.
Even businesses that aren’t for profit businesses usually need some sort of income to survive
through donations etc and will still have financial aims relating to money.
A business may have more than one financial aim but here are some of the most common financial
aims;
The first and most common financial business aim especially when starting a business is
to survival financially.
Meaning the business neither makes a profit or a loss, but can make enough to cover costs
such as wages, rent and rates.
This is a very common aim for a business just starting out as it means the business has
managed to build a good foundation to then start making more money in the following years.
Following on from survival is usually the aim of making a profit.
This is probably the most common financial aim.
Making a profit is when the business has money left over after all the costs involved in
the business are taken away from the revenue made.
A business does not want to spend its whole time surviving so they set profit targets
to help them move on from survival and become a more profitable and successful business.
Another financial target is sales.
A sales target may be to sell a certain amount of a particular product.
For example to sell 3,000 vanilla candles a month.
Such targets set a specific aim for the business and also helps employees work towards a common
goal.
Sometimes sales targets can be distributed among staff with 10 employees being targeted
to sell 300 candles each to reach the overall sales aim of 3000.
Market share is the percentage of the market controlled by a particular company.
For example in the supermarket industry, Tesco has the biggest market share in the UK at
around 20% and then other supermarkets such as Asda and Sainsbury’s occupy about 16%
each and so on.
A supermarket such as Aldi may aim to increase their market share from 8% to 10% over the
course of a year with a long terms aim of becoming market leader.
Financial security relates more to the individual or individuals that run a business and is
often a financial objective of smaller businesses such as sole traders or partnerships.
These businesses may have a financial aim to become financially secure meaning that
they can gain financial security from the business they have started by being able to
withdraw enough from the business to make them financially stable.
For larger organisations this may be to ensure they cover costs easily meet financial commitments.
Non-financial aims and objectives These objectives are not linked to monetary
success and are often personal to the entrepreneur that started the business.
These aims can often be the main driver for the starting of a business or can often help
solve some social issue in society.
For profit businesses can still have very strong non-financial aims that are central
to the way the business operates.
Some non financial aims include:
Social aims these are linked to a business committing to act and operate in an ethical
way.
For example Lush vows to fight animal cruelty and will never use ingredients that have been
tested on animals.
These aims are core to the businesses identity and can mean that the business makes less
money by sticking to these ethical principals.
Another non financial aim is personal satisfaction.
An entrepreneur starting a business may have the aim of turning a hobby into a business
that provides them with career satisfaction.
For example someone with knowledge of exercise and nutrition who regularly works out may
decide to start a business personal training to fulfil their aim of personal satisfaction.
Challenge may also be an aim.
The challenge of starting something from scratch, escaping a 9-5 career and creating a living
off of your own work ethic and drive may be the aim of an entrepreneur starting and running
their own business.
The final non-financial aim of starting a business can be control.
An entrepreneur being able to make their own decisions, control their own working hours
and putting into practice their own business strategy can be a rewarding aim for any start-up.
These non financial aims are particular powerful for start-ups as these aims can give them
the will to keep driving the business forward.
Why aims and objectives differ between businesses We have already discussed a lot of differences
in objectives from smaller businesses wanting to survive to businesses wanting to make large
profits but also differences in non-financial aims such as Lush having very social aims
to end cosmetic testing on animals.
These aims differ because every business is different, they have different desires and
have different things they want to accomplish through the business.
These aims will also be different depending on the size, age and market the business operates
in.
Size and scale clearly impacts the aims and objectives of a business, companies like Apple
will not set financial targets to survive as they are a global business already making
billion in profit therefore survival is not an appropriate financial aim, however survival
would be appropriate for a small candle business in its first year of operating.
For this business to aim to survive would be realistic based on their size and time
in business.
Also the market a business operates in massively impacts how their non financial aims will
differ.
We mentioned Lush aiming to end cosmetic testing on animals.
This aims is very fitting for the market that lush operates in, however ending cosmetic
testing on animals would be an inappropriate aim for a BBQ restaurant as they are in a
different market selling animal products to consumers.
This shows that aims are directly impacted by the market a business operates in and can
be a reason for differing aims between businesses.
Finally, aims and objectives change over time.
A business like Apple may at one time have aimed to survive but have now gone onto aims
greater than this due to their global success and size.
As a business grows and progresses through its life its aims and objectives should also
grow and progress to keep challenging the business and its owners.
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