1.

3 Putting a business idea into practice

1.3.1 Business aims and objectives

Financial aims and objectives

• Survival
• Profit
• Market share
• Sales
• Financial security

Non-financial aims and objectives

• Social objectives
• Personal satisfaction
• Challenge
• Independence and control

Purpose of setting objectives:

• Direction - setting clear objectives will allow a business to

decide on the direction it should take, for example whether it
should expand or not.

• Focus for employees - It is important that all employees follow

the business’s objectives to help increase efficiency overall.

• Allows planning - A business plan will be designed so that the

business objectives can be met. Clear objectives allow for
consistent planning.

• Measurement of success - allows a business to measure its

success. The business can then correct or change its business
strategy or plans if it is not working.
Factors affecting the aims/objectives of a business

There are always different factors that can affect the objectives
of a business:

• The size of a business – over half of new businesses fail within

five years and many new businesses do not survive much
beyond their launch. Customer satisfaction or being ethical
could be an objective to help them compete effectively against
rivals.
• Level of competition – if a business doesn’t have much
competition, it may focus on profit maximisation, whereas if
there is a lot of competition a focus on customer satisfaction or
maintaining market share will be important.
• Type of business – not-for-profit organisations may focus on
social or ethical objectives. A sole trader may focus on survival
rather than growth; growth may be more important to a larger
organisation.