What are The Business SMART Objectives and Planning?

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The Business SMART Objectives and Planning

Objectives

Business objectives explain how an organization’s aims are to be achieved. Objectives are shorter term and can often be measured, so the organization can check whether it has achieved the objective. Measuring how well an objective has been achieved gives entrepreneurs valuable information and is a key measure of business success.

Objectives develop from aims. For example, an aim of the department for work and pensions in 2011 said ‘we want children to have the best possible start in life, growing up in secure homes and developing skills for the future. This is developed as the objective to end child poverty by 2020.

SMART AND NON –SMART OBJECTIVES

A SMART objective is stated in ‘target’ terms. The SMART objective should be …..

*Specific - the objective states clearly what it wants to achieve.

*Measurable- It is measured against a statement (e.g. ‘a 10% increase in…’)

*Achievable – (or attainable)-the objective must be capable of being achieved, not set as a target that is impossible to achieve.

*Realistic – can the objective be achieved with the resources that are available?

*Time – related – the achievement of the objective must be related to a certain time period or deadline, such as ‘this financial year’.

Key Words:

Objectives personal to the entrepreneur, Such as satisfaction, independence and being in control, are non – SMART

Some objectives are stated in non-SMART (or ‘qualitative ‘) terms. For example, a business’s objective, based on customer satisfaction. Could be SMART if it is stated in measurable terms,  such as counting the number of customer complaints made. An example of a non –SMART objective on customer satisfaction is Tesco’s 2009 objective of ‘offering customers the best value for money and the most competitive prices.’

 

Influences on Objectives

The growth of the business will lead to a change in its objectives. Other influences on objectives come from outside and therefore cannot be controlled. One example is our economy: in times of economic growth, objective based on large profits or increased sales are popular, whereas in a recession the objective of survival is more important.

A business might find that there is conflict between objectives. For example, the objective to ‘increase profit by 5 % this year’ conflicts with ‘improve employee welfare’ because when increasing profits, managers might negotiate lower pay increases. Another conflict is between owners wanting short –term high profits and managers who want steady growth.

Key words:

Detailed objectives will be set for an organization’s main areas or activities, e.g. production, marketing and finance.

Business Planning

A business plan is a written document that describes a business, its objectives and strategies, its market and its financial forecasts. The plan is necessary if external finance is needed. The plan also helps establish the resources and finance needed to get started : what marketing? What production? What finance? What resources?

The purpose of planning

Entrepreneurs create a business plan…….

·        To see if the business is viable I.e. whatever it is practicable to run the business.

·        So they can check the effectiveness of the business.

·        To help raise the finance the business needs.

The plan must be regularly updated because of changes that occur ….

*internally, for example, a change in how the factory floor is organized.

*Externally, for example, change in tax rates, consumer tastes , or in the strength of the economy.

The Contents:

Typical sections in a business plan are as follows:

*An Executive summary – an overview of the new business (some lenders and investors make judgments about the business based only on this.)

*A Description of the business – information on the business and its products. To whom the business will sell , and why it is a suitable idea.

*the marking strategy – why  customers are likely to buy the products, and how the products will be sold to them.

*the management team – information on the entrepreneur and the staff.

*the operations – premises, production facilities, information systems .

*financial forecasts – financial summaries based on the above information.

Key Words:

*The exact content and structure of business plans varies from business to business.

*Careful business planning helps reduce uncertainty and risk for start –up business.