Aims, Objectives and Business Calculations
What Are Aims and Objectives?
Before a business can make decisions about pricing, staffing or marketing, it needs to know what it is trying to achieve. A business aim is a general, long-term goal — something like “become the most trusted bakery in the city” or “survive the first two years of trading.” An objective is a specific, measurable target set to work towards that aim — for example, “increase revenue by 15% over the next 12 months.”
The distinction matters in the exam: aims are broad directions; objectives are the concrete milestones. A business without clear objectives struggles to judge whether it is on track or needs to change course.
Business aims and objectives split into financial (survival, profit, sales, market share, financial security) and non-financial (social objectives, personal satisfaction, challenge, independence and control). Both types matter — especially for sole traders and small businesses where the owner’s personal goals often drive the business.
Financial Aims and Objectives
Survival is typically the number-one priority for a new business. In the first year, cash flow pressures, low customer awareness and unexpected costs can threaten even well-planned ventures. A business focused on survival may accept low or zero profit short-term, just to keep trading.
Profit — the money left over after all costs are deducted from revenue — becomes a primary objective once survival is secured. Profit funds growth, rewards the owner, and provides a buffer against future downturns. Market share refers to a business’s percentage of total sales in its market. Gaining market share often requires investing in marketing or lowering prices, which reduces short-term profit but may build a stronger position over time. Financial security means having enough reserves to absorb shocks — particularly important for seasonal businesses.
Non-Financial Aims and Objectives
Not every entrepreneur is primarily motivated by money. Social objectives might include reducing environmental impact, paying staff above the minimum wage, or donating a proportion of profits to charity. Many small businesses — particularly cooperatives and community enterprises — place social objectives above financial ones.
Other non-financial motivations include personal satisfaction (building something meaningful), challenge (proving a business concept works), and independence and control (being your own boss and making your own decisions). These are common reasons people leave employed work to start a business, even when doing so involves financial risk.
Aims differ because of the business’s age, size, ownership type and the owner’s personal motivations. A new sole trader in year one may focus entirely on survival; the same trader three years later may prioritise profit maximisation or independence. A private limited company with investors is more likely to prioritise financial returns to satisfy shareholders.
External factors also shift objectives. During an economic recession, even profit-focused businesses may downgrade their objective to survival. During a period of growth, a business confident in its cash position may switch to an aggressive market-share target. Understanding why objectives change — and being able to link this to a business context — is an AO2 application skill that earns marks in extended responses.
Revenue, Costs and Profit — The Calculations
Revenue is calculated by multiplying the selling price by the number of units sold:
Revenue = Price × Quantity sold
Costs fall into two types. Fixed costs do not change with the level of output — examples include rent, insurance and management salaries. Even if a business sells nothing in a month, fixed costs still have to be paid. Variable costs change directly with output — raw materials, packaging and sales commission are typical examples. The more you produce, the higher your total variable costs.
Total costs combine both:
Total costs = Total fixed costs + Total variable costs
Profit = Revenue − Total costs. If this figure is negative, the business is making a loss. Profit is NOT the same as cash — a profitable business can still run out of cash if customers pay late or stock builds up.
When a business borrows money, it repays more than it borrowed. The extra amount is called interest. The formula to calculate the interest rate (as a percentage) is:
Interest (%) = ((Total repayment − Amount borrowed) ÷ Amount borrowed) × 100
Example: a business borrows £20,000 and repays £24,000 in total.
Interest = ((24,000 − 20,000) ÷ 20,000) × 100 = (4,000 ÷ 20,000) × 100 = 20%
Interest is a fixed cost for the business and must be covered regardless of how much revenue is generated.
Worked Calculation Example
Foxgrove Candles sells handmade candles at £12 each. In July it sold 800 units. Its fixed costs for July were £3,200 (rent and insurance). Its variable costs were £4.50 per candle.
Revenue: £12 × 800 = £9,600
Total variable costs: £4.50 × 800 = £3,600
Total costs: £3,200 + £3,600 = £6,800
Profit: £9,600 − £6,800 = £2,800