Before you form business objectives, the first thing you have
to do is: “define your business”!
Defining your business
A business definition basically tells you ‘what kind
of business’ you are in. It is a one-line summarization of
your entire business. It helps you clearly communicate what your
business is about to others.
A business definition is generally based upon 3 points:
- Who? : Who is your customer? To know this look at your
customer description from “Understanding your business!
- What? : What customer needs will be satisfied by your
business. Remember needs are not only physical needs. There are also
other needs like the need for achievement, need for status etc.
- How? : What solution does your business offer to satisfy
the needs of the customer.
For e.g. if it were a business making snacks the answers to
the questions would be:
- Who? People who want to “munch”
- What? Need to quickly quench their hunger in an enjoyable
- How? By providing good tasting between meals food products.
A “sample business definition” using the
answers to the above questions would be:
"We will manufacture good and tasty sweet snacks to enable individuals
to quickly satisfy their hunger."
After you have your business definition ready, the next step
is to formulate your business objectives.
What are business objectives?
Business objectives are specific statements that give
projections about growth or development to companies. For example, a
business objective could be, “We must triple the sales of our
product by next year.”
Why are business objectives needed?
Business objectives are important to give direction to a
business. If you are running a business without any business
objectives, you shall not be able to grow successfully in any
direction. Having business objectives, gives you a much better
understanding of where you stand, how to improve and what changes in
your current method of working will be required to reach your
objectives. Not having business objectives leads to an un-coordinated
business that has a very low probability of being successful.
When setting business objectives, one must make sure that they
- Quantitative: The business objectives should be expressed
in terms of numbers. It should not be expressed vaguely like,
“Our sales should go up!”
- Time-frame specific: Time frames should be specified in the
business objectives. This helps you to understand where you stand with
respect to the completion of the current objective.
- Flexible: It is very important that your business
objectives are adaptable to change. If the situation in which the
business is working changes, the business objectives should change to
reflect these changes.
- Understandable: The business objectives should be made in
an understandable way. This helps in communicating your objectives to
your investors, employees, partners etc. Without this communication of
business objectives, it becomes very difficult to reach them.
- Realistic: It is important that the business objectives are
realistic, or you may end up disappointing your investors and your self.
Examples of business objectives:
“Sell 1000 units o product A and 500 of product B by
December 31, 2007”
“Maintain a minimum of 5% market share in the soft
segment in Pune City during the whole of 2006”
Next - How to make
the “right” business decisions? >>
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What do “you” want?
Table Of Contents
a company? – Introduction
your new business idea “really” that brilliant?
to make a “perfect” business plan? &
Why make one?
plan - Step 1 – Understanding your business!
– What do “you” want? (Personal
– How to form business objectives? & Why?
4 – How to make the “right” business
Making the right legal decisions
Making the right production decisions
Making the right hiring decisions
Making the right inventory decisions
Making the right marketing decisions
– Estimating the capital required
– How to “draft” the perfect business
to raise the capital required for your business?