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Business · Putting a business idea into practice

Business aims and objectives

Every business sets out to achieve something. Some aims are financial - survival, profit, sales, market share and financial security - and some are not, such as social objectives, personal satisfaction, challenge, independence and control.

  • 7 key terms
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Teacher resources

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Student handouts

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Last Chapter

Answer from memory before the answers appear.

  • Name the four customer needs.

    Price, quality, choice and convenience.

  • What is the difference between primary and secondary research?

    Primary is new, first-hand information; secondary already exists.

  • Name the five ways to segment a market.

    Location, demographics, lifestyle, income and age.

  • Give one limitation of a market map.

    A gap may have no demand, only two features are shown, or positions are based on opinion.

Learning Objectives

  1. 1Explain the difference between business aims and objectives.
  2. 2Explain the financial aims and objectives of a business: survival, profit, sales, market share and financial security.
  3. 3Explain the non-financial aims and objectives: social objectives, personal satisfaction, challenge, independence and control.
  4. 4Explain why aims and objectives differ between businesses.

Aims and Objectives

An aim says where a business wants to go; its objectives are the steps that get it there.

  • Aim

    A general, long-term goal the business wants to achieve, for example "to become the most popular café in town".

  • Objective

    A specific, measurable target that helps achieve the aim, for example "to increase sales by 10% within 12 months".

  • SMART objectives

    Good objectives are Specific, Measurable, Achievable, Realistic and Time-bound, so the owner can tell whether they have been met.

  • Why set them

    Aims and objectives give the business a direction, motivate staff, help with decisions and let the owner measure success.

Financial Aims and Objectives

  • Survival

    Staying in business, especially in the first year or two when many new businesses fail.

  • Profit

    Making revenue greater than costs - the reward for the owner's risk.

  • Sales

    Increasing the number of products sold, or the value of sales (revenue).

  • Market share

    Increasing the business's percentage of the total sales in its market.

  • Financial security

    Having enough money to cover costs and unexpected problems, so the owner is not worried about paying bills.

Understanding the Financial Aims

Which financial aim matters most depends on the business's situation.

  • Survival first

    A brand-new business, or one facing a new competitor or a recession, may simply aim to survive.

  • Profit

    Once it is established, most owners want profit - to reward themselves and to reinvest.

  • Sales and market share

    A business may aim to grow sales even at the expense of short-term profit, to beat competitors and become well known.

  • Market share formula

    Market share (%) = (the business's sales ÷ total market sales) × 100.

  • Financial security

    Building up savings and cash so the business, and the owner's income, are safe from surprises.

Non-financial Aims and Objectives

  • Social objectives

    Doing good for society or the environment, such as helping the local community or reducing waste.

  • Personal satisfaction

    The pride and enjoyment of doing something worthwhile and doing it well.

  • Challenge

    Testing yourself by building something new and overcoming problems.

  • Independence and control

    Being your own boss and making your own decisions.

Case study

The Big Issue: A Social Objective

The Big Issue was launched in 1991 by John Bird and Gordon Roddick to help people who were homeless earn a legitimate income. Vendors buy copies of the magazine and sell them on the street at the cover price, keeping the difference. The business still needs to cover its costs, but its main aim is social: giving people a way to work their way out of poverty.

1991 The Big Issue launched
Social Its main aim: helping vendors earn an income

Why Aims and Objectives Differ

No two businesses have exactly the same aims.

  • Size

    A small business may aim to survive or give its owner independence; a large one may aim for market share.

  • Age

    A new business usually aims to survive; an established one aims for growth and profit.

  • The owner's priorities

    Some owners want to make as much money as possible; others want a good work-life balance or to help their community.

  • Type of business

    A social enterprise puts social objectives first; a company owned by shareholders puts profit first.

  • Competition

    A business in a fiercely competitive market may have to focus on survival or keeping its market share.

Financial or Non-financial?

Financial aims

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

Non-financial aims

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

Whose Aims Are These?

For each business, decide on its most likely main aim and explain why - a market stall that opened last month; a café run by a charity that trains young people; a gym chain with 200 branches; a freelance web designer who left a stressful office job.

1. Name the most likely main aim.

2. Say whether it is financial or non-financial.

3. Explain why it suits that business.

A good answer shows: A named aim for each business, with a reason linked to its size, age, type or owner.

Can I...?

  1. 1Explain the difference between an aim and an objective.
  2. 2Explain the five financial aims.
  3. 3Explain the four non-financial aims.
  4. 4Calculate market share.
  5. 5Explain why aims differ between businesses.

Summary & Exam Focus

  • Aims are long-term goals; objectives are specific, measurable targets.
  • Financial aims: survival, profit, sales, market share and financial security.
  • Non-financial aims: social objectives, personal satisfaction, challenge, independence and control.
  • Aims differ with the size, age and type of business and the owner's priorities.

Exam focus

Explain one reason why the aims of a new business might be different from the aims of an established business. (3 marks) (3 marks)

Name the difference, then explain why the business's situation causes it - a new business has few customers and little cash, so survival comes first.

Key terms

The vocabulary this lesson expects you to use. Each one is linked from the first place it appears above.

Aim
A general, long-term goal a business wants to achieve.
Objective
A specific, measurable target that helps a business achieve its aim.
Survival
Continuing to trade rather than closing down.
Market share
The percentage of total sales in a market made by one business.
Financial security
Having enough money to cover costs and deal with unexpected problems.
Social objective
An aim to help society or the environment.
Social enterprise
A business whose main aim is social, using its profits to do good.

Questions and answers

9 questions set on this lesson, with the mark schemes and model answers open.

1. Exam question State 1 mark Foundation

State one non-financial aim of a business.

Mark scheme — 1 mark available

  • Any one of: social objectives; personal satisfaction; challenge; independence; control — 1 mark

Model answer

Independence.

2. Exam question Define 1 mark Foundation

Define the term 'market share'.

Mark scheme — 1 mark available

  • A business's sales as a percentage / proportion of total market sales — 1 mark

Model answer

The percentage of total sales in a market that is made by one business.

3. Exam question Calculate 2 marks Foundation

A bakery's sales last year were £180,000. Total sales in its local market were £1,200,000. Calculate the bakery's market share. You are advised to show your working.

Mark scheme — 2 marks available

  • Correct method: (180,000 ÷ 1,200,000) × 100 — 1 mark
  • Correct answer: 15% — 1 mark (award 2 marks for the correct answer with no working)

Model answer

(£180,000 ÷ £1,200,000) × 100 = 15%

4. Exam question Outline 2 marks Foundation

Outline one financial aim a new business might have.

Mark scheme — 2 marks available

  • A financial aim identified: survival / profit / sales / market share / financial security — 1 mark
  • Developed: why a new business might have it — 1 mark

Model answer

Survival (1), because many new businesses fail in their first year, so the owner's first goal is to cover costs and keep trading (1).

5. Exam question Explain 3 marks Foundation

Explain one reason why the aims of a new business might be different from the aims of an established business.

Mark scheme — 3 marks available

  • A reason identified, e.g. new businesses aim to survive / established ones aim for growth or profit — 1 mark
  • First linked point of explanation — 1 mark
  • Second linked point of explanation — 1 mark

Model answer

A new business is more likely to aim for survival (1). It has few customers and little money set aside, so it may struggle to cover its costs in the first months (1). An established business already has loyal customers and a steady income, so it can aim for profit or growth in market share instead (1).

6. Multiple choice 1 mark Foundation

Which one of the following is a financial aim?

  1. A Personal satisfaction
  2. B Independence
  3. C Market share Correct
  4. D Challenge

Why: Market share is measured in sales, so it is a financial aim. The others are non-financial.

7. Multiple choice 1 mark Core

"To increase sales by 10% within the next 12 months." What is this?

  1. A An objective Correct
  2. B A general aim
  3. C A non-financial aim
  4. D A social enterprise

Why: It is specific, measurable and time-bound, so it is an objective rather than a general aim.

8. Multiple choice 1 mark Core

A business sells £50,000 of goods in a market worth £250,000. What is its market share?

  1. A 5%
  2. B 20% Correct
  3. C 25%
  4. D 50%

Why: (50,000 ÷ 250,000) × 100 = 20%.

9. Multiple choice 1 mark Stretch

Why is survival often the main aim of a new business?

  1. A Because new businesses cannot make a profit
  2. B Because survival is a non-financial aim
  3. C Because new businesses have no competitors
  4. D Because many new businesses fail in their first years Correct

Why: New businesses have few customers and little cash, so staying open comes before profit or growth.