Every organization has a vision and that vision is carefully planned and broken into achievable missions which are time-oriented. Business goals are the aims and objectives a business is set to achieve which is carefully broken into short and long-run.
Generally, the short-run goals of the business will be to ensure that the average variable cost is less than the selling price of its product (per unit). For a better explanation, let us take a look at the basic concept.
Total variable cost: Is the cost that varies with output. That is a production cost that changes when output /production changes. for instance, a baker who produces cake will need a certain quantity of sugar for every size of cake he wishes to bake. That means the amount(cost) that will be spent on sugar by a baker will vary (change) depending on the size of the cake. The cost of sugar in the production of cake, therefore, is a variable cost. There are many production materials that will fall into this category as well. Any cost that changes when output change is a variable cost.
Average variable cost: When just one or a minimal number of products are produced, it becomes easy for the producer/business owner to use hand to measure sugar and every other ingredient in every cake. But a company that produces a large number of cakes on a daily basis will not be able to do that. To calculate the quantity of sugar per cake, all the company has to do is divide the total quantity of sugar by the number of cakes produced. The cost of the quantity of sugar used per cake is known as the average cost of sugar that is AVC=TC/Q. The average cost is equal to total cost divided by quantity.
Longrun goal of a business
The long-run objective of a business is for all factors of production to be variable(change with production). That is to say, a business organization long term business goal is for all production factors to vary with the level of output. That is, Cost of production should change when the total output of the organization changes.
Let us summarise what we have learnt so far
Business goals are aims and objectives a business is set to achieve, they are broken into missions which are time-bound.
There are long and short-run business goals
The short-run goal of a business will be to ensure that its Average Variable Cost is less than the price where the Average Variable Cost is equal to Total Variable Cost divided by Total Quantity AVC=TVC/q.
Organizational approach to business goals
Now let us leave the calculative and economic approach to business goals, lets us discuss the organizational approach. The organizational approach demands that a business goal should be SMART. That is: Specific, Measurable, Achievable, Relevant, Timely.
SMART business goals
Specific: A goal should be distinct, it should be definite. you should have a particular goal. A man who has no sense of direction will end up nowhere in life. So it is for setting and achieving business goals. Your business goal should not be a loose one, it should be precise.
Measurable: A goal should be quantifiable. A smart goal should have a metrical meter that can be used to measure its performance. measurability is very important, it will enable you to know how you have gone and the attainability of the goal. A goal should be appraisable, there should be a gauge to measure how well a business has been able to achieve its objectives.
Achievable: A goal should be attainable. A goal should be able to stretch the goal setter, a goal should be demanding, in fact, some ambitious business person will set goals that will shake them and their entire team. This is a great thing to do, but a goal should not be unrealistic. A smart person will not set an unachievable goal that will be a huge waste of time and resources. When setting a goal, time and resources available should be put into consideration. A good goal should be tasking and demanding, it should, however, be considerate and attainable.
Relevant: This mean goal(s) set should align with the overall business objective. A business goal should not deviate from the vision and mission of the business. It should complement and drive towards the achievement of the overall business aims not to create chaos and confusion. It should be pertinent and apposite to fostering overall objectives.
Timely: Time is germane in setting a business goal. The goals set should be achievable within a time limit given the available resources. Time creates a sense of importance and urgency, it makes the teamwork towards the achievement of the goal with more speed and accuracy. without a time frame, the project set to be accomplished may be dragging and taking with levity. Time limit facilitates the quick accomplishment of tasks and gives room for efficiency and maximization of resources.
Common business goals
- Create new products
- Social media marketing and campaigns
- Business expansion
- Reduce the cost of production
- Investigate competitors business strategies
- Increase your market shares
Create new product: Innovation is the key to increase in revenue. To keep your customers and expand your customer base, you must invest in research and development. Research is the key to creating new products that will be better than the one(s) you already have and more importantly, the kind of product that customers will be willing to buy. There is no point in creating a product if customers will not buy it. Before investing in product creation, you have to be sure it is a marketable product.
Social media marketing & campaign: The internet is presently the biggest market place in the world. Invest in social media marketing is a great wealth creation skill every business should explore. This however should be done with caution. The goal of invest in this is to increase revenue not to increase cost. Experts should be involved and other things put In place to ensure the investment yield the expected return.
Business expansion: Every business seeks to expand. Penetrating new market in a new geographical location is the dream of every modern business, that should be yours too.
Reduce cost of production: The goal of every business is to reduce cost as much as possible. This will make it possible to sell at a lower price than competitors, expand market share and increase revenue.
Investigate competitors business strategies: You should know your competitors’ strategies in order to be ahead of the competition. Since you are fighting for the same market, investigating the sales strategies of your competitors is what you should consider.
Increase in market share: Market share is the percentage of the total market customers an organization is able to acquire. The more shares an organization is able to acquire, the more dominance and profitability it will achieve. Increase in market share should be a top priority for a business