1.4 Business aims and objectives

• All businesses have one or more objective
• Profit


  Most businesses will make achieving profit one of their objectives
• Satisficing


  Making just enough profit to pay for general needs
• Growth


  Important to a business as a way to raise profits, especially for larger businesses such as public limited companies
• Sales growth


  A business may want to see sales grow, which may not necessarily mean an increase in profit, as prices may have to be lowered in order to attract more customers
• Market share


  A business may wish to see its market share grow, meaning the business has a greater percentage share of a market
• Survival


  A rather more basic business objective, particularly important to a new business for the first few months
• Providing a service


  May be closely linked to making a profit - the better the service, the more customers it will attract and therefore profits will grow
• Businesses will always start with the best of intentions, but objectives may change as the business evolves
• Providing a service may be closely linked to making a profit - the better the service, the more customers it will attract and therefore profits will grow
• For some businesses, providing a service may be the main objective, even if it means making less profit
• With good service, the business gets a good reputation, possibly winning awards, which may well be enough to satisfy the owners of the business
• Such a business may not even think of growth, being content to continue in its present form, providing a service to customers
• This is often found in smaller businesses, which serve the local community
• When a business starts, its main objective may be to simply survive the first few months

  • It will probably face competition from other established businesses
  • It needs to establish its name
• To achieve the above main objective, a business may put excellent customer service as an aim, because this may tempt potential customers to try the new products and services on offer
• A sole trader or partnership may wish to become a limited company with the growth of a business
• With profits being made and an increase in wealth of the owner(s), the attraction of limited liability will mean that personal possessions (and all of the profit) is not put at risk
• A business may grow to a point where it simply does not wish to grow any more
• The aim then becomes one of keeping the profits at a particular level, or making more profit by improving the existing shops or through better customer service
• If a business grows too quickly it may lose sight of how it is treating its customers
• This may mean that there needs to be a switch to providing a good service to avoid losing customers
• Other businesses may set their sights higher than simply surviving and aim for profit in the first year
• For some entrepreneurs simply making enough profit to live on is just not enough
• Ambitions may drive the business on to aim for greater profit
• This profit could then be used to pay for the growth of the business
• When businesses evolve, it could mean that they grow
• It could also mean that they are in some difficulty and have to change their aims and objectives
• Profits may be reduced or the business might be running at a loss
• This means that for a short time, there is no realistic point in making profit an objective
• The objective may be to keep losses at a certain level, or in extreme cases, to survive
• Businesses that have tried to expand too much have had to set new aims and objectives that can include closing down some of their operations
• In a competitive market, there may be less emphasis on growth, simply because there are so many other businesses providing the same product or service
• Small differences can have a real impact on a business in a competitive market
• Businesses in different situations will often have different objectives
• Although some objectives might differ, there are often common objectives in businesses
• Aims and objectives may remain the same, especially in small businesses
• In other situations, aims and objectives change as businesses evolve
• The aims and objectives of a business are often influenced by the attitude of the business owner(s)
• The objectives of a business are often linked