In most businesses, the owners decide on the objectives for the business.
When a business first starts trading it has few loyal customers and no reputation. The most likely objective for a start-up business is simply survival. As the business grows and begins to win market share, the aim may shift towards expansion and/or increasing profits.
Some owners have a vague idea about their objectives. The best types of objective are SMART, which stands for:
An example of a SMART objective is 'to increase profits by 10% within the next 12 months'. SMART objectives allow the performance of a business to be assessed.
While owners have a major say in deciding the aims of a business, other interest groups called stakeholders are usually considered. Stakeholders are any group of people interested in the activities of the business - they could be managers, staff or customers. When owners sacrifice some profit to pay staff an annual bonus, this is an example of stakeholder consideration.