Objectives of a Business Plan
Every new or existing business should have a business plan in place before they conduct the first transaction. The objectives of a business plan give the designer of the business plan direction and purpose. Business plan objectives must be clearly outlined because they are the foundation of the plan. Determining what the objectives are is an essential first step done during the planning stage. The objectives are decided upon at the same time financial goals are set. Decisions involving strategy for business growth and other managerial decisions are often grounded in these predetermined objectives.
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Function
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Determine objectives by answering where will the business be in five years, what is the size of the company and what are the goals regarding market share, physical growth and human resources?
Objectives monitor progress and keep the company focused on goals. Goals can be financial or revolve around the products or services provided. Objectives may serve to please investors or to give direction to management.
A small company's objectives may be the same financially as a large company if they carry high-end products where size does not determine financial potential.
According to Bev Clement, of "How to Run an Online Business," objectives should be measurable so progress can be determined, actionable so a clear action can be designed and realistic so that they can be achievable within the given time frame. Objectives allow those reading the business plan to see what the future company will look like.
What are commonly included objectives of a business plan?
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Common objectives include raising money, attracting talented employees, establishing creditworthiness and fulfilling dreams the CEO has for the company.
A new company may have objectives that revolve around raising money for business capital. A company desiring to expand product lines may need to establish creditworthiness. The company CEO may have established a company with humanitarian goals in mind.
When determining objectives, think about profitability goals and when they are to be achieved. Is there a niche the company should dominate, or should there be objectives concerning product lines or services offered? Once objectives are clearly stated, the business plan can be designed.
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Problems
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Encountering problems while writing business plan objectives may include being too vague or not being specific enought in detail to give a true picture. Financial objectives can become overly optimistic or unrealistic. Objectives may be inconsistent with company history or what the market may bear. Problems arise when objectives show that company personnel doesn't know the competition, dismisses the competition prematurely or forgets the competition altogether. Problems can also occur when objectives fail to take into consideration the needs of the readers of the business plan. Readers may include bankers, clients, potential employees, suppliers or possible future strategic allies.
Prevention/Solution
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Avoid being vague with objectives by giving facts to back up statements and by using words that describe goals clearly. Objectives should not be out of line with past performance. An accurate assessment of all competitors and the market are essential before objectives can be defined. Know whom you are writing the business plan for and what their needs are regarding the company. Bankers and investors have different needs than future employees; make sure objectives address all potential readers.
Summary
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Objectives of a business plan when clearly stated lead the reader of the plan to make decisions regarding the company that are favorable. Objectives answer basic questions about the financial stability and future growth of the company. Objectives can monitor the progress a company makes towards achieving goals. Objectives can be used to attract talent, establish creditworthiness, raise money and realize the goals and dreams of those who contribute to the company.
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