The value of clear objectives is that they give a clear sense of purpose that all employees can buy into. That, in turn, is motivating as staff try their hardest to achieve the objective. Objectives provide a focal point for staff activity and decision making.
Why aims and objectives differ between businesses?
Aims and objectives differ because business owners differ. Some have their sights set on money; others have a business idea first and see money as a secondary factor. Many experts have said that the most successful businesses have an aim other than money. It is business success that leads to money being made.
People starting a new enterprise usually have one of three objectives:
- A financial objective, such as to be rich.
- A business objective, such as James Dyson in setting up his own bag-less vacuum cleaner business – he was determined to prove that his idea would work.
- A social objective, such as starting a charity aimed at improving water quality in African villages.
Financial objectives:
Survival objective: A business survival objective is a goal aimed at ensuring the continuation and resilience of a company, particularly during challenging or uncertain times. These objectives are focused on maintaining the organization's viability, stability, and ability to weather disruptions or crises. Business survival objectives often prioritize actions that help the company endure economic downturns, changes in market conditions, competitive threats, or other significant challenges. Survival objectives may include
- Cash Flow Management
- Cost Reduction
- Diversification
- Customer Retention
- Risk Management
- Adaptability and Innovation
- Strategic Partnerships
Profit Objective: A business profit objective is a specific financial goal that a company aims to achieve within a defined period. Profit objectives are fundamental to the success and sustainability of businesses, as they represent the primary measure of financial performance and viability. Typically profit objectives involve;
- Revenue Growth
- Profit Margin Improvement
- Cost Control
- Return on Investment (ROI)
- Profitability Ratios
- Profit Growth Rate
- Shareholder Value Creation
Sales Objective: A business sales objective refers to a specific, measurable goal set by a company to achieve a desired level of sales within a defined period. Sales objectives are crucial for guiding the sales team's efforts, driving revenue growth, and ultimately contributing to the company's overall success. These objectives are typically aligned with the organization's strategic goals and may vary depending on factors such as market conditions, product lifecycle, and competitive landscape. Typically sales objective involves;
- Revenue Targets
- Market Share Expansion
- Customer Acquisition
- Sales Volume Increase
- Average Order Value (AOV) Growth
- Sales Conversion Rates
- Customer Retention
- Sales Channel Optimization
- Product or Market Penetration
- Sales Team Performance
Market share Objective: Business market share objectives refer to specific goals set by a company to achieve a desired portion of the total market for its products or services within a defined period. Market share objectives are important strategic targets that businesses pursue to enhance their competitive position, increase brand awareness, and drive growth. These objectives are typically based on the company's current market position, competitive landscape, industry trends, and growth opportunities. This typically involves;
- Increase in Market Share Percentage
- Market Expansion
- Competitive Positioning
- Targeted Segmentation
- Geographic Expansion
- Customer Acquisition:
- Product Portfolio Expansion
- Partnering and Alliances
- Customer Retention and Loyalty
- Continuous Monitoring and Adjustment
Financial security Objective: Business market share objectives refer to specific goals set by a company to achieve a desired portion of the total market for its products or services within a defined period. Market share objectives are important strategic targets that businesses pursue to enhance their competitive position, increase brand awareness, and drive growth. Commonly they are;
- Increase in Market Share Percentage
- Market Expansion
- Competitive Positioning
- Targeted Segmentation
- Geographic Expansion
- Customer Acquisition
- Product Portfolio Expansion
- Partnering and Alliances
- Customer Retention and Loyalty
- Continuous Monitoring and Adjustment
Non-Financial Objectives:
Social objectives: Business social objectives refer to goals and initiatives that companies undertake to fulfill their social responsibilities and contribute positively to society. These objectives extend beyond purely financial goals and aim to address social, environmental, and ethical concerns while creating long-term value for stakeholders. Business social objectives are integral to corporate social responsibility (CSR) efforts and reflect a commitment to sustainable and ethical business practices. For example;
- Environmental Sustainability
- Corporate Philanthropy
- Ethical Supply Chain Management
- Diversity and Inclusion
- Employee Well-being
- Stakeholder Engagement
- Responsible Marketing and Advertising
- Social Impact Investing
- Product Responsibility
- Thought Leadership and Advocacy
Personal satisfaction: for many people it is hard to get satisfaction from being a small cog in a big wheel. They need to break away and show what they can do. This is a particularly strong motive for those who have struggled to show their talents elsewhere. There is a famously high correlation between entrepreneurship and dyslexia and other causes of struggles.
Challenge: some people are mountain climbers and others prefer a walk in the countryside. Starting your own business is an extraordinary challenge that will test your personal skills, such as leadership, charm and the ability to plan and to prioritise; character traits, such as resilience, energy, dedication and persistence; as well as your intellectual abilities (intelligence). If that all sounds like too much pressure, stick to the country walks.
Independence: entrepreneurs hate being told what to do; they value their independence greatly. This was especially the case for immigrants who, in the past, found their career progression blocked by discrimination. Independence remains a key attraction of entrepreneurship.
Control: this is linked to independence. The entrepreneur demands to be in control. This is why many entrepreneurs are reluctant to sell out for large sums of cash. The control they have within ‘their’ business is a drug that is hard to give up.
Why business aims and objectives change as businesses evolve?
Aims and objectives are fundamental components of a business's strategic planning process. They provide direction, purpose, and a framework for decision-making. As a business evolves, several factors contribute to the need for changes in aims and objectives:
- Market Dynamics: Changes in market conditions, including shifts in consumer preferences, technological advancements, or competitive landscapes, may necessitate adjustments to a business's objectives to stay relevant and competitive.
- Organizational Growth: As a business grows, its capabilities, resources, and opportunities expand. This growth may lead to the need for revised objectives that align with the new scale and scope of operations.
- Performance Evaluation: Regular performance assessments may reveal areas where the business is excelling or underperforming. Adjusting objectives can help focus efforts on areas needing improvement or capitalize on strengths.
- Strategic Shifts: Businesses may undergo strategic shifts due to changes in leadership, mergers and acquisitions, or shifts in organizational priorities. New strategies often require corresponding changes in aims and objectives.
- External Factors: External factors such as regulatory changes, economic fluctuations, or geopolitical events can impact a business's operations and may require adjustments to objectives to mitigate risks or capitalize on opportunities.
- Customer Needs: Over time, customer needs and preferences may evolve. Businesses need to adapt their aims and objectives to ensure they continue to meet the changing demands of their target market.
- Technological Advancements: Advances in technology can disrupt industries and create new opportunities. Businesses may need to adjust their objectives to leverage emerging technologies or respond to competitive threats.
- Sustainability and Social Responsibility: Increasingly, businesses are incorporating sustainability and social responsibility goals into their operations. Changes in societal expectations or regulatory requirements may necessitate updates to objectives in these areas.
- Financial Considerations: Changes in financial performance, funding sources, or investment priorities may prompt revisions to objectives to ensure financial sustainability and growth.
- Internal Capabilities: Changes in internal capabilities, such as improvements in workforce skills or operational efficiencies, may impact the feasibility or relevance of existing objectives.
In summary, as businesses evolve, the dynamic nature of the internal and external environment requires continual review and adjustment of aims and objectives to ensure alignment with strategic goals and to enable the organization to adapt and thrive in a changing landscape.