When a sole trader sets up they may have some unstated aims or objectives - for example to survive for the first year. Other businesses may wish to state exactly what they are aiming to do, such as Amazon, the Internet CD and bookseller, who wants to “make history and have fun”.
An aim is where the business wants to go in the future, its goals. It is a statement of purpose, e.g. we want to grow the business into Europe.
Business objectives are the stated, measurable targets of how to achieve business aims. For instance, we want to achieve sales of €10 million in European markets in 2004.
A mission statement sets out the business vision and values that enables employees, managers, customers and even suppliers to understand the underlying basis for the actions of the business.
Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims.
The most effective business objectives meet the following criteria:
S – Specific – objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of its beds a night during October, an objective specific to that business.
M - Measurable – the business can put a value to the objective, e.g. €10,000 in sales in the next half year of trading.
A - Agreed by all those concerned in trying to achieve the objective.
R - Realistic – the objective should be challenging, but it should also be able to be achieved by the resources available.
T- Time specific – they have a time limit of when the objective should be achieved, e.g. by the end of the year.
The main objectives that a business might have are:
Survival – a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis.
Profit maximisation – try to make...