Aims are the main overall goal of a business or enterprise.
Objectives are the little goals that help the business to achieve the Aim.
Think of it as a SatNav, the postcode is the aim — the final destination and the objectives are the individual directions to get there.
The purpose of business aims is to:
- Provide focus
- Inform mission statement
- Help allocate resources
- Manage Progress
Remember for the exam:
Provide focus
Having no aims and objectives means that the businesses may not focus on one thing at a time, so having aims and objectives allows businesses to decide what their main focus should be. Businesses can range from having 1 owner and no employees to having millions of workers. Did you know that Walmart has 2,300,000 employees? Imagine all of those people not working towards the same goal – it would be chaos. By having aims and objectives all of the employees can have a focus to work towards to help the business achieve the same overarching aim.
Inform mission statement
A mission statement is a summary of why the business exists and what its goal is. It identifies what operations the business conducts and the overall purpose. Having aims and objectives that properly feed into a mission statement, allows the business and its employees to have synergy and work towards the same goal, giving a greater chance of success.
Help allocate resources
Businesses have limited resources to use to generate a profit. Owners will need to manage their resources well to prevent over-expenditure. By having aims and objectives, the business can focus on where to divert resources so that they are not wasted. This will allow the business to really focus its spending on what will most help it to meet its aim.
Manage Progress
Businesses can use their aims and objectives to check their progress toward their overall goal.
The best objectives will be SMART, which stands for:
- Specific — what is to be achieved, e.g. increase sales
- Measurable — how much, e.g. by 10%
- Agreed — everyone in the business approves
- Realistic — is it possible to achieve with the current resources available
- Timed — deadline, e.g. 12 months
An example of a SMART Objective is ‘to increase sales by 10% over the next year’. SMART objectives allow the business to set practical objectives that they can measure performance against.
SMART objectives allow the business to measure if they have been met or not.
Business aims and objectives will fall into 2 categories:
Revise these and then complete the questions below.
Task
- Give an aim for your favorite sports club or pop star
- What do the letters SMART stand for?
- Give an example of a SMART objective for Spotify, the music streaming service
- Give an example of a financial objective for a new business
- Give an example of a non-financial objective for starting a business
