Aims and objectives might seem very similar to each other but they are indeed very different and that connotation between them is quite evident when used in the subject and field of enterprise.
- Aims: An over-all goal that an enterprise wants to achieve.
- Objectives: A specific target that an enterprise wants to reach, so that it can achieve its aims
Aims are long term, objectives are short term. Aims are general and objectives are specific, they should definitely also fall under the “SMART” method, wherein they are specific, measurable, achievable, realistic and absolutely timebound, as these are the A’s and B’s of creating a successful if not a plan on its own for your novel business.
- Example of Aims: to increase sales revenue
- Example of objectives: to increase sales revenue by 25% by the end of the year.
Importance of setting objectives –
- Provides focus and a sense of direction
- Motivates employees
- Measures progress
- Actions can be monitored
- Plans and strategies adopted to achieve targets
Different types of objectives –
- Profit maximization
- Growth or expansion
- Satisfying profits
- Survival Increase market share (sales growth)
- Increase revenue
- Cash flow
- Providing good services
- Protect environment
- Being ethical
- Social needs
- Legal compliance
Objectives are also changeable through the business process, because of quite a many reason:
- Changes in external environment
- A new competitor
- Advancement of technology
- Economic conditions of the country
- Political instability leading to change in government policies
Planning can be useful in many different places, which is also an essential way of achieving objectives. Planning can be short term or long term.
An enterprise may use several planning tools such as:
➢ Action plans
➢ Business plans
➢ Marketing plans
➢ Plans for negotiations and meetings
Action plan – A list of tasks that can be completed in order for a set of goals to be achieved. An action plan provides a step by step framework of individual activities needed to complete a project. It shows what needs to be done, when it needs to be done, by whom it needs to be done and how progress will be monitored.
➢ It provides step by step framework of activities needed to be done to complete the project
➢ It shows what needs to be done
➢ It shows by whom it will done
➢ It shows by when it needs to be done
➢ And how the progress will be monitored
Stages of an Action Plan Construction –
- Set the goal you want to achieve
- Identify the actions you will need to achieve the goal
- Break the actions into small and simple tasks
- Put these tasks into a logical order- order of priority
- Decide on the time spent for each activity
- Think of how you can monitor and check if an activity is completed
- Start implementing your actions/ activities
- Review and update or modify plan while carrying out the activity
- Achieve the goal
Methods of monitoring Action Plans are as important as setting them, hence there are a few methods to do the same.
To monitor means to check the progress of something over a period of time.
❑Check progress of project from time to time.
❑Know the stages are completed in the right order and on time.
❑Identify the actions to be taken
Business Plan – A formal document that gives the aims of the enterprise and outlines ways those aims can be achieved
The purpose of a business plan –
It helps the entrepreneur:
✓ To plan ahead- which will help in identifying and avoiding risks that may take place.
✓ It helps to set objectives and measure the success of achieving these objectives.
✓ What products or services do I intend to sell?
✓ Who should be my target audience?
✓ What will be my main costs and will I be able to make enough products to cover the cost?
✓ It provides information about the market, competitors and potential demand and make marketing decisions
Basic information – Name, objective, description of proposed idea
Marketing – Size of market, nature and type of product, price of product, promotion methods used, place to sell
Operation (production) – methods of production, resources used
Human resources – number of employees, who will do what?
Financial – budgets, income statement, balance sheet, cash flow forecasts, etc.
Monitoring and updating a business plan –
A plan drawn may not be accurate as it is based on estimates, assumptions and historical data. There are so many factors that may affect your plans and so plans need to be constantly modified
Business plans need to be updated for reasons such as:
➢ Objectives set may have now been achieved
➢ You may require additional finance
➢ There may be changes in the ownership and management
➢ New products need to be developed
➢ Changes in competition
➢ External factors may have changed such as growth in population
➢ Cost may have increased or decreased from what was planned