Business Aims and Objectives

Business Organisations

Dear James,

An aim is something they want to achieve. These can be long or short term plans, probably over the next three to five years. Businesses will probably want to focus on one or more of the following areas; profit and profit maximisation, survival, break even, growth, market share, service provision, develop their relationship with other businesses.

SMART objectives is a mnemonic to guide people when they set objectives, often called Key Performance Indicators (KPIs), for example for project management, employee performance management and personal development. SMART stands for:

S – Specific: you need a clear statement about what you are going to do. Usually, it is quantified, which means it has a number in it. For example; ‘Complete Unit 2 in eight weeks.’

M – Measurable: achievement can be checked. Recording your progress and keeping a record of your completed assessments will enable you to measure your achievements.

A – Achievable: you can attain your target if you work hard. You can do really well if you stretch yourself.

R – Realistic: your target should be sensible so you can stand a chance of achieving it. For example, it would be unrealistic to aim to complete Unit 2 in a week.

T – Time-Constrained: every objective should include a date for achievement or review. This acts as a warning, as well as a spur, if you are falling behind/

You either achieve a SMART objective or need a good reason for not doing so. This type of objective is useful or learners in schools and colleges. It is also important for managers and employees in businesses.

The purpose of setting aims and objectives is make your business a success and to improve faults in your company. You also set them up to survive when times are hard and customers are not spending as much money as they would. They are put in place to hopefully make profit and growth.

It is not always possible to meet aims and objectives. Businesses will want to know why they have failed and then take action to correct this as soon as possible. A business may not meet its aims and objectives for several reasons. Many of them relate to the type of external changes mentioned. Businesses often try to forecast these changes in advance by doing TEST analysis.

P – Political: a change of laws or regulations may affect the businesses, such as the introduction of drink driving laws or the smoking ban, which adversely affected the pub trade in Britain.

E – Economic: the economy may go into recession, as it did in 2008/09. As a result, consumer demand for the goods and services of many businesses fell dramatically.

S – Social: peoples buying habits and lifestyles might change. The demand for carpets fell when wooden floors became popular.

T – Technological: the launch of a new, technologically superior product or service by a competitor can have a serious effect.

Unfortunately, it is impossible to foresee every possible event that can occur, such as a major customer or supplier going out of business or an unexpected fall in demand that sharply reduces forecast sales income.

An aim for James could be ‘Profit and Profit Maximization’ to try and get as much profit as he can as he will still have to pay back what he used to buy the barber shop and the equipment. His three SMART objectives could be specific ‘make as much profit as he could, create a relationship of customers’ measurable ‘record what sales he makes every hour and day’ then he can see what is his good times of the days and what are the busiest days to employ workers and realistic ‘make an achievable profit target and able to pay the rent on time.