Survival is the often the first objective of your business target. You need to keep a business going for certain period of time after opening, to do that you must ensure to invest enough money to keep your business operating over this time. During the survival period, the business must be able to make the least income that could cover the entire expenses such as wages, bills, rents, promotional budget, stock and inventories that are required to run your business without additional investment.
Making profit at this stage is rare, but is also possible. However be able to survive your business prove that you have planned well in your business, this also indicate that your products has most likely met your customers’ needs, and your business has probably established a good customer base and built up some business reputation. If a business is able to get past this stage then it is clear the business is doing well and will be able to take the next stage for a new objective.
The next objective for any business will be to meet the stakeholders’ needs. The stakeholders can include various parties each of whom would have different interest and hence different needs. For example, government as stakeholder, a business should comply with certain regulation or government policy in order to run the business legally, such as health and safety regulations. Another stakeholder could be shareholders in a company, who would be interested to know the business progress and company profit.
In order to satisfy the shareholders needs, regular communication with all shareholders to ensure they are aware of the business situation and progress is very important, at the same time you can also find out if their expectation has changed over time. After meeting the needs of your stakeholders a business will want to maximize their sales revenue, the ways to generate more sales are to sell more, sell whatever you can and get more customers.
These can be achieved through special promotional program to attract customers, by selling bundle products at discount pricing, such as buy two get one free in a product selling environment, or set lunch or dinner menu in a restaurant business. Maximizing profits is believed to be the main objective for most businesses. Besides increasing sales revenue we also need to look at the running cost, spend wisely and maintain a cost effective business structure. The most immediate and effective ways will be to reduce cost or expense in running your business.
You can simply cut expenses across the board. Small reductions all around are easier to handle than withdrawing an entire budget line of your business, such as advertising, buying in bulk in stead of small quantity would also be favorable. However this may only be true for long term objectives and short term objectives are different. Finally the last objective will be to grow; business growth is very important if the business wants to become bigger, becomes internationally and even diversify to other business. Grow can be achieved by increasing product lines and increase market share.
You need to study the market from time to time to see if market or customer has changed, develop and introduce new products as well as suitable marketing plan to meet the changing market needs. For my business I would follow the five basic objectives that I have talked about earlier. This will help me plan easier and move forward with decision making. The main objectives for my restaurant will be firstly survival like almost all businesses, at this stage, I need to ensure business can generate enough income to survive, i. e.
enough customer, that implies some sort of promotional plan in place to bring in customers, perhaps advertising either newspaper, through radio or TV etc. these can be very costly and could have negative impact to my survival objective when financial budget is limited, my cheaper options are to have own website on internet, posting photo, menu, telephone, address and map of my restaurant, I will also have staff distributed flyers on the street, giving away free food sample to taste or small souvenirs such as stickers and key-ring etc.
Survival is most critical, but addressing stakeholder’s needs is equally important and should be regularly being looked at to ensure all business related matters are in order and compliant to regulations and progress of business can be readily tracked and well communicated within the company. Once business becomes steady I will focus on increasing revenue as much as possible, some of my plan would be to introduce customer loyalty program, giving special coupon to returning customers, opening up set menu for lunch hour target for offices people.
Once sales revenue can be maintained at growing level, I will then look at ways to maximize profits by introducing more products, cost reduction, increase market share to force out competitions, expand new customer by introducing new products and incorporate appropriate marketing plan. The profit that I make would then used for opening new restaurants or expand business for different market and finally establish up a reputable business brand name, just like what Richard Branson did to build up “Virgin”. The main objective I have talked about is to make profit and survive failure to do so the business could go bankrupt and close down.
However some business might not wish to make profit at all, this is either because they are in public sector or charity environment, but they do need to earn enough to cover the cost, in this case their objective is to establish a service that will be put back into the business. Beside that there are also non-financial objective, some business will try to be the biggest in their market, others will try to provide the highest quality product possible, other might try to limit environment damage they cause, for example, use re-cycle products as much as possible.
For my business, I would like to ensure that the highest quality and most innovative food to be served in a comfortable and enjoyable environment, the objectives associated with this vision is to find top quality produce from suppliers, to maintain highest hygiene level in every area of my restaurant, to use recycling products as much as possible to save environment, such as cotton-napkin than paper ones, finally all my staff must have adequate serving and communication skills to ensure customer satisfaction, for example I will have regular in-house training for staff.
A stakeholder is anyone who is interested in the business; it can be divided into Internal and external. It is shown in below diagram. The internal one consists of business owners and employees, the external covers customers, government, local community, suppliers, competitors and other businesses. The owners are the most important stakeholder. An owner runs the business, and makes decision about the business; therefore a business success is depended on the way the owner run it. In a limited company they are the shareholder.
A shareholder will want to invest to a business that is doing well so that their dividends are high and the share price will increase. The employees work for the business so that they are part of the process, they are interested in job security, good wage, good working condition and promotional prospects. The customers are important and usually the main source of sales revenue for a business, customers usually wants high quality products at low price. The government ensures that rules and regulations are in place and also that taxes are paid.
The local community will want to know if the business is needed or not, whether it will cause noise and pollution problem, and also whether it would provide local job. Other businesses/competitors will want to know about the business and its idea. All these stakeholders are needed so that the business can meet the needs of all of them. Failing to giving them their needs may have different consequences on the business. I am one of the major stakeholders of my restaurant.
I will want to have a successful and profitable business, be able to meet all the financial and non-financial objectives that I mentioned above, my business partners or shareholder would also share the same interest.. The other stakeholders in my restaurant include my employees, like waiters, chefs and cleaners. They will all want to have an opportunity to be promoted, have holidays, medical insurance, and want to be paid on time. Customers are one of the most important external stakeholders, they will want to enjoy quality fusion foods from my restaurant.
They will also want good quality service, variety of food, good location and value for money. The local community will want to jobs available, a clean and environmentally friendly area, and food delivery service. Government wants my restaurant to comply with rules and regulations, the legislation, pay taxes and comply with Health and Safety regulation. Competitors want to know about other businesses/how they operate (i. e. information, prices, strategies). My main suppliers are Bayern Gourmet Food Company, they want to have a businesses loyalty, and also want to be paid on time.