Running a business is a marathon, not a sprint! Stay on course to achieve long-term success by tracking specific, measurable business objectives.
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For a business to be successful, its leaders need to have a clear understanding of what they are trying to achieve. But big dreams don't come true overnight -organizations need to break their vision down into smaller, actionable steps that can lead them in the right direction.
A great way of doing that is by setting business objectives. So in this article, we will describe 29 different business objectives you can use to measure and improve your organizational success.
Business objectives are the outcomes that an organization’s owners and management try to achieve in order to reach their big-picture, ambitious goals.
Think of it as if you were running a marathon, and aiming to complete it in under four hours. This goal (running the marathon in less than four hours) would be your north-star - the big, ambitious ultimate outcome you were aiming for.
But in order to see if you were on track to achieve this, you'd want to be monitoring your pace throughout the marathon - making sure that you were covering enough miles per hour in order to make your final big goal actually achievable.
Running a business is a marathon, not a sprint. So these smaller, measurable objectives that help you stay on track over the long-term are like your business objectives.
They also function as success metrics that help assess various aspects of a business track how they are performing – and, for this reason, a good business objective must be specific, measurable, and time-bound.
Clear business objectives are an indispensable part of a business plan and can be viewed as guidance that leads you to your destination, and helps measure progress at the same time.
The purpose of business objectives is to align a company’s business processes with its strategic vision. Well-defined business objectives help bring many benefits, in particular the following:
Profitability refers to the company’s ability to generate income that exceeds its expenses. It’s a metric that shows how efficiently a company creates value for shareholders. That's why the profit maximization business objective is an important one when it comes to involving investors.
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Revenue is the amount of money made by a company over a certain time period. Revenue growth means that a company makes more money than it did over the previous identical time period.
A revenue growth business objective can be a specific annual revenue you want to achieve, or, as an alternative, a revenue increase by a certain percentage within a limited time period.
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Business costs are the money you spend on running your business. Cost reduction means identifying and reducing these expenses without jeopardizing the quality or putting any area of your company at risk. It improves profitability and competitiveness, helping you keep prices low and this way being more attractive to consumers.
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Cash flow is the amount of cash that enters and leaves a company. It’s positive if you make more than you spend, and it’s negative if you spend more than you make. Cash flow is similar to profit but there is a difference: profit is the amount of money that is left after all the expenses have been paid, while cash flow is the net flow of money in and out.
By managing cash flow as your business objective, you ensure the financial health of your company, observing where the money comes from and how it’s spent. This, again, is attractive to investors.
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ROI refers to the ratio between profitability and the cost of investment that shows how efficient the investment is. The returns can include higher sales, increased revenues, or reduced costs. Increasing your returns without increasing costs means improving your return.
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Customer acquisition cost is a business metric that refers to the amount of money a company spends to acquire new customers. It directly impacts profitability and is associated with marketing strategies.
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Customer retention rate is the percentage of customers a company retains over a certain time period. Loyal customers are valuable to your business as they can significantly increase your profit – especially in highly competitive markets, where competitors analyze your weaknesses and move fast to create alternative products.
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This metric shows how satisfied the customers are with the products or services a company offers. The data for the metrics is collected through surveys, where customers provide feedback – typically, by rating the products using a 1-5 scale (very unsatisfied – unsatisfied – neutral – satisfied – very satisfied.) The ways to conduct a survey can be by using a traditional questionnaire, an app, via SMS, or others.
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NPS is an index that measures if customers are willing to recommend a company to other people. The instrument to calculate NPS is a survey with a 1-10 scale. This metric is important because people do talk about things they purchase, and a negative experience means a loss of potential clients.
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This is a measure of a client’s value to a business over the whole period this customer has a relationship with a brand. It doesn’t include only individual transactions – it covers all potential interactions a client and a brand might have. CLV can be historic (how much a client has already spent on your business) and predictive (how much a client might spend, based on the historical data.)
Enhancing customer lifetime value can help businesses develop strategies to both acquire new customers and retain existing ones.
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Process optimization is an implementation of strategies and methods to improve business processes and achieve maximum efficiency. There are several methods of process optimization – for example, PDSA (Plan, Do, Study, Act), DMAIC (Define, Measure, Analyze, Improve, Control) SIPOC diagram (Suppliers, Inputs, Processes, Outputs, Customers) etc.
Process optimization has many benefits. It makes processes consistent and smooth, reduces risks, minimizes future mistakes, and helps stay within a budget (or even save money) – which, in turn, helps increase profits.
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The way you utilize your resources has an enormous impact on your business. With machines, low utilization rates mean that a machine is either broken and needs to be replaced, or is not used by employees, which also provokes questions; overutilization can cause a quick damage. With people, underutilization leads to reduced productivity and missed deadlines, and overutilization causes burnout, quality issues, and increased turnover.
An effective resource utilization rate, on the contrary, keeps your business on track and guarantees good prospects, ensuring operational efficiency.
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Inventory management refers to the process of managing (storing, ordering, and selling) a company’s inventory, which is, raw materials and finished products. An effective inventory management means that a business quickly reacts to customers’ demands and can provide products or time. Ineffective management, on the contrary, means being under- or overstocked, and it effects companies badly, especially small businesses.
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Time-to-market is the amount of time that passes from the moment you get an idea of a product to the moment you launch it. The faster your time-to-market, the more chances that you will be ahead of your competitors, and vice versa.
This way, reducing time-to-market gives you a competitive advantage, which results in more sales and, consequently, a higher profit.
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Supply chain optimization is the management of supply chain operations, which aims to ensure their maximum efficiency. There are three main phases of this process: supply chain design (the location of facilities,) supply chain planning (inventory planning and coordination of assets,) and supply chain execution (warehouses and inventory management, transportation, decision-making etc.)
An effective supply chain optimization helps eliminate unnecessary costs, enhances the coordination between stakeholders (suppliers, partners, and vendors,) and ensures high quality standards.
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Risk management is a process of understanding and working with things that pose a threat to your business or a particular project. This process includes 5 steps: risk identification, risk analysis, risk evaluation, risk treatment, and risk monitoring. Optimized risk management enables a company to deal with challenges quickly and effectively, and this helps it stay afloat and even increase profits.
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Employee engagement refers to how much employees are motivated, committed, and passionate about their work. It directly affects their performance and productivity – and, as a result, a company’s success. Employees who feel neglected tend to lose motivation to move forward and meet goals.
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Turnover is the number of employees who leave a company over a specific time period. While it’s natural for any company, a high turnover rate poses a challenge to a company, since it means money needs to be spent on finding and training new employees. By reducing turnover rate, a company stays on the safe side.
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A high productivity means doing more in the same amount of time. Naturally, productive employees are valuable for a business, so increasing employee productivity is a great business objective. Employee productivity depends on a variety of factors like work environment, the tooling and equipment available, psychological safety, growth opportunities, clear expectations, robust project planning etc.
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Teaching employees new skills has two important functions: first, it helps save money on finding other people with necessary skills; and second, it gives people a sense of growth and continuous improvement, which positively affects employee productivity. At the same time, not all training is effective, and that’s why it’s important to measure and track outcomes - for instance, if productivity improves following a period of training.
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Diversity in business helps find unusual and innovative solutions, thanks to the variety of opinions and experiences. But it cannot exist without inclusion – creating the environment and opportunities for employees to let them feel that they belong. By promoting diversity and inclusion as a business objective, a company can retain employees and attract new ones with a big potential.
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Market share is a company’s sales as related to industry sales over the same period. This is a metric that reflects your position in the market in comparison to your competitors. By increasing your market share, you gain dominance over your competitors, as well as other advantages – like better prices from suppliers, new customers, and a stronger company reputation.
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This is a business strategy whose purpose is to expand an organizational business to new areas, cities, or countries. Geographical expansion lets a company grow its business by getting new markets and customers and, what’s important, makes a company less vulnerable to economic problems that might happen in one specific region.
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New product or service launch means bringing a new product (or service) to market. A successful launch requires analyzing potential clients’ problems and creating a solution that would fix that problem, as well as researching your competitors.
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Brand awareness is the familiarity of consumers with a brand. High brand awareness means that a significant amount of people can recognize the brand by its name or logo, and that they trust the brand and consider it popular.
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Competitive positioning refers to how a particular company is different from its competitors. To advance your competitive positioning, you need to improve the value of your company to customers, making your products or services more appealing to customers. It will help you build brand loyalty.
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Quality assurance is a process that helps a business make sure its products or services meet quality standards. It covers the whole process of product development – production, testing, packaging, and delivery. Improving this process leads to a better company image.
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Regulatory compliance involves the mandatory obligation to adhere to a set of regulations, guidelines, and laws, both inside and outside of the organization. These regulations protect the interests of both stakeholders and customers. By ensuring regulatory compliance, you avoid various legal issues and reduce risks, as well as increase workplace safety.
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This objective is about being aware of the environmental problems and trying to prevent them – however, at the same time, it can bring you profit by making your business more appealing to customers.
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The clearer your business goals are and the clearer your path to them, the sooner you will get to your destination. Business objectives can help you achieve your strategic vision in a thorough, systematic way. By improving different aspects of your business, you will inevitably bring it to a new level, ensuring the company's sustainable growth.
