Making money has become the order of the day. Young people, as well as old counterparts, want to make this money that is a term in the Bible as vanity. I am not exempted from this. In fact, you may conclude that one reason I am writing this post is, of course, to make money and rightly so. However, making money is not the only reason why people do business. Here are the top six reasons (objectives) people do businesses.
Six objectives of the business
To make a profit. Profit is the primary reason people do business. But not every businessman understands this. You made a million Naira sales does not mean you have to make a profit or as it is most times called “make money.” Profit is earned when you subtract all expenses incurred during the course of the business from sales. For example, if the sales earned (and not cash received) for the month is 4 Million Naira and the expenses incurred (and not cash paid) for that month is 1 Million Naira, then your profit is 3 Million Naira.
To satisfy consumers’ needs: Although, it is said that profit is the main reason people do businesses. To me, consumer satisfaction should be the main driving force for business. If profit is what is in your heart for doing business. It wouldn’t take a year for that business to close down.
However, if satisfying consumer needs is the primary motive or objective, then the business will strive as the businessperson continues to see reasons for doing business.
To achieve this, encourage customers to write a review of your product or services. Tell them to tell you what they hate about the product so you can find ways to improve it.
Shareholders satisfaction. For companies, the satisfaction of shareholders needs is a top reason they do business. Shareholders want maximization of their wealth. Many shareholders want dividends now instead of growth (this so-called value shareholder other shareholders prefer growth first, then dividend. These are growth shareholders. Business owners will find a way of satisfying both types of shareholders or focus on one type.
Create a good public image. The public image of a business, also called Goodwill is an important part of every business. A firm that lacks a good public image may start missing sales and profit and end up folding up.
OLX Nigeria is an example of this effect. The company folds up in 2018. This was as a result of a bad public image. OLX is a classified Ads provider. That is an online place where people can buy and sell their already used items or news ones alike. But, the user who promotes their products and services on this platform became fraudulent. As a result, customers start losing trust in the firm. Failure on their part to find a solution to this problem leads to the downfall of the OLX.
Market share. Increase in market share is another important reason or objective of why people do businesses. Just as no mother wants her child to continue crawling on the ground for years, so many business owners do not want their businesses to remain stagnant. Growth is Paramount! To achieve growth, an increase in the firm’s market share most.
Innovative product. Another reason why people do business is to sell their innovation to consumers who need them. Innovation is a continuous process. People invent things often. This invention needs to be sold out. So, businesses are formed. Facebook is a good example of an innovative product.
The six objectives of doing business are not exhaustive. There are other reasons people do businesses. In the next lesson, the classification of businesses will be discussed.