Purpose of a Business?

[goonielife]

Make Money. Period.
There are scenarios where an entity owning multiple individual businesses can use the loss of a single business to help offset costs associated with the profit from another, but in the end there has to be a profit.
Everything else people have suggested are simply ways to help ensure a business makes a profit.
Businesses can run for periods of time at a loss in order to help maintain staff and keep people fed, but that can only go on so long.
Very large businesses have a lot of leeway, Amazon is one for example that has the ability to have losses year after year and still grow, because of the assets it already has in place, but if those losses continue without a strategy or turn around eventually it would need to close.
Now you can talk about non-profits, how they exist (usually) to help people and NOT make money, BUT the people who run those non-profits still make a wage. So while the business itself doesn't necessarily grow in assets, cash, or capital (which most non-profits actually do, it just isn't paid out to "shareholders" or owners in the form of dividends), they still exist to make someone money.

[chuck_roxas45]

Make Money. Period.
There are scenarios where an entity owning multiple individual businesses can use the loss of a single business to help offset costs associated with the profit from another, but in the end there has to be a profit.
Everything else people have suggested are simply ways to help ensure a business makes a profit.
Businesses can run for periods of time at a loss in order to help maintain staff and keep people fed, but that can only go on so long.
Very large businesses have a lot of leeway, Amazon is one for example that has the ability to have losses year after year and still grow, because of the assets it already has in place, but if those losses continue without a strategy or turn around eventually it would need to close.
Now you can talk about non-profits, how they exist (usually) to help people and NOT make money, BUT the people who run those non-profits still make a wage. So while the business itself doesn't necessarily grow in assets, cash, or capital (which most non-profits actually do, it just isn't paid out to "shareholders" or owners in the form of dividends), they still exist to make someone money.

IMHO, this is the best post so far. No kumbayas, just real world.

[Stuart Ackerman]

IMHO, and part of my core beliefs...

Every business transaction must do two things at the least...

Both seller and buyer must sincerely believe that they both got a great deal... :)

[Ryno]

A friend once said to me "you never regret doing things the right way." This is the most evident when you are running a business. However, what's right to one person may not be right to another. Perhaps the purpose of running a business, rather than working for someone else, is that you can spend your career and life doing things most in line with your moral code. You have more of an opportunity to do what you think is right.

[Leadsled]

To create a customer for the rest of his or her life.

[Willamette]

To satisfy a need in the community.

[vaisforlovers]

Despite many's overwhelming agreement, I still do not believe that money is the purpose of a business. Money is the purpose behind a job. (not work, though)

I humbly believe that I make more money by not owning a business. Right now, money is more important to me than owning a business, therefore I choose a job where I can make more money. One day soon, I may own my own business, and at a pay cut for sure, but I will have more freedom and more of a chance to be a producer in our community. The value I add by being a business owner will be more valuable to me than the money I could have made. As said before, if it was about the money to me, I'd keep being an employee and doing a job.

Therefore I still believe that the purpose of a business is to make the business owner(s) happy. It sounds like to many, money is needed to be happy. And if more money makes the owner happy, then of course money and profit can become the purpose of a business. There is nothing wrong with this purpose, so long as laws/ethics/morals are followed.

When a business creates value, profits often follow. Creating value can be a profit motivated decision. And who is to ever truly know the purpose behind a business owner's actions? If he creates value to gain a profit, good for him. We as a community benefit, and so does he because of the profit he makes. Imagine a waiter who is really good at what he does. He's nice, attentive, sharp, etc. Does it matter that he was fakes it the whole time to get a better tip. I'd rather have him fake it and receive the great service, than him be his honest self. Faking it is a job to him, and he gets rewarded for it monetarily. Then there are those that are great servers naturally and serve because they enjoy it and are good at. The recipients may very well get the same service, but this waiter is a much happier person over all. I choose to believe there are both of these types of people, and the optimist in me believes the community is happier when people do stuff that they like and the money is a byproduct, not the purpose.

So, I believe there can be other motivations (purposes) too... free time, creating value, power, good will, altruism, control, pride... all of which may be more important to an owner than strictly profit. If money is the sole purpose, these other things always loose. But, look at what Patagonia did last Friday. They chose to donate 100% of their proceeds to charity. Not 100% of their profits, but proceeds. They raised over $10 Million in one day. Some may argue that this was strictly a profit motivated business decision (publicity stunt?) which may have backfired. Call me naive, but I choose not to believe so. I believe they have a purpose,in addition to profit, that they chose to prioritize.

A business needs money to survive. A man needs food to eat and develop. A man needs oxygen to breath. Without enough of each, respectively, acquiring them escalates to a very high priority. But would you say the purpose of a human is to acquire food or breath oxygen. I wish for all of you a better purpose than acquiring food and breathing. And I wish for all businesses a better purpose than acquiring more money. A community becomes a better place when profit doesn't hold the highest priority of a business. Yes, it needs profit to survive, but profit doesn't have to be THE purpose for existing. Money is required, but it doesn't have to be the driving factor.

I believe Spyderco is an example of this type of company, a company that puts pride in ownership above profit... that puts pride in creating value above profits. Thank you, Sal for running this type of company.

[Ryno]

Despite many's overwhelming agreement, I still do not believe that money is the purpose of a business. Money is the purpose behind a job. (not work, though)...

I agree with this. I meet plenty of business owners that barely scrape by, but would never switch to working a 9 to 5.

[Surfingringo]

Despite many's overwhelming agreement, I still do not believe that money is the purpose of a business. Money is the purpose behind a job. (not work, though)

I humbly believe that I make more money by not owning a business. Right now, money is more important to me than owning a business, therefore I choose a job where I can make more money. One day soon, I may own my own business, and at a pay cut for sure, but I will have more freedom and more of a chance to be a producer in our community. The value I add by being a business owner will be more valuable to me than the money I could have made. As said before, if it was about the money to me, I'd keep being an employee and doing a job.

Therefore I still believe that the purpose of a business is to make the business owner(s) happy. It sounds like to many, money is needed to be happy. And if more money makes the owner happy, then of course money and profit can become the purpose of a business. There is nothing wrong with this purpose, so long as laws/ethics/morals are followed.

When a business creates value, profits often follow. Creating value can be a profit motivated decision. And who is to ever truly know the purpose behind a business owner's actions? If he creates value to gain a profit, good for him. We as a community benefit, and so does he because of the profit he makes. Imagine a waiter who is really good at what he does. He's nice, attentive, sharp, etc. Does it matter that he was fakes it the whole time to get a better tip. I'd rather have him fake it and receive the great service, than him be his honest self. Faking it is a job to him, and he gets rewarded for it monetarily. Then there are those that are great servers naturally and serve because they enjoy it and are good at. The recipients may very well get the same service, but this waiter is a much happier person over all. I choose to believe there are both of these types of people, and the optimist in me believes the community is happier when people do stuff that they like and the money is a byproduct, not the purpose.

So, I believe there can be other motivations (purposes) too... free time, creating value, power, good will, altruism, control, pride... all of which may be more important to an owner than strictly profit. If money is the sole purpose, these other things always loose. But, look at what Patagonia did last Friday. They chose to donate 100% of their proceeds to charity. Not 100% of their profits, but proceeds. They raised over $10 Million in one day. Some may argue that this was strictly a profit motivated business decision (publicity stunt?) which may have backfired. Call me naive, but I choose not to believe so. I believe they have a purpose,in addition to profit, that they chose to prioritize.

A business needs money to survive. A man needs food to eat and develop. A man needs oxygen to breath. Without enough of each, respectively, acquiring them escalates to a very high priority. But would you say the purpose of a human is to acquire food or breath oxygen. I wish for all of you a better purpose than acquiring food and breathing. And I wish for all businesses a better purpose than acquiring more money. A community becomes a better place when profit doesn't hold the highest priority of a business. Yes, it needs profit to survive, but profit doesn't have to be THE purpose for existing. Money is required, but it doesn't have to be the driving factor.

I believe Spyderco is an example of this type of company, a company that puts pride in ownership above profit... that puts pride in creating value above profits. Thank you, Sal for running this type of company.

Hey Vaisforlovers, thank you fro sharing your philosophy on this. Our views on the purpose of a business are quite different. I think, however, that is more a result of how we define a "business" than anything more profound. In other words, I believe our disagreement is rooted in semantics rather than philosophy.

I agree with many of your thoughts about having a higher purpose than being motivated by money. I am not a very material person and money doesn't motivate me much (that's why I don't have a business ) I agree about the importance of creating value, good will, altruism, pride, etc. Those things actually motivate me far more than material gain. All that said though, I define a business as an entity that exists to create profit...period. That doesn't mean that I don't value those other things or think they should play a role in how a business is run. To the contrary, I value them far more than any material profit that a business could create. They are just not the purpose of a business as I choose to define a business.

For the sake of adding a bit of clarity, I will give a quick example. I fish from a kayak almost every day and get compensated for it in a variety of ways. It's not much of a living but its what I do. It is actually more like a passion that I get paid for. I have product sponsors that keep me supplied with all the gear I use and in addition I have some secondary projects related to my fishing that make a bit of money. It is kind of like what Chad (Xplorer) was describing in his earlier post. My main motivation is not to make financial gain but rather to enjoy myself and share something nice with others while providing enough profit to continue doing what I do. Here's the relevant part though...I do not call it a business. It might be a business by some people's standards, but not by mine.

I don't call it a business simply because a business is something else entirely. If my fishing were a business then I would manage it differently. I would take people out on guided fishing trips even though I don't like doing that. I would do it though because it is very profitable. I would work harder at the parts of it that are more profitable and spend less time at the parts that are more enjoyable. I would probably hire employees so that I could grow and make money off the effort of others. Soon I would need an accountant and a lawyer. I could turn my passion into a very profitable and complicated business. The recipe is not even that complex...but the end result is.

Once I had that tiger by the tail I could reassure myself that though my life might be stressful and I was always running 90 miles an hour trying to manage what I had created, at least I was adding value to the world through my business. I could look at the people I employed, the jobs I created, the lives I touched, the values my business stood for and feel a sense of pride in the effect I had on my community and the world around me. Here's the thing though, I don't need a business to accomplish those things. I, Lance the human being, can affect my world in all those ways. I don't need a business to have ethics, or to exhibit good values. I don't need a business to positively affect the lives of the people around me. So when we speak of purpose, I see all those qualities you mentioned as MY purpose on this earth. A business? I only need that to make money.

[Surfingringo]

Despite many's overwhelming agreement, I still do not believe that money is the purpose of a business. Money is the purpose behind a job. (not work, though)...

I agree with this. I meet plenty of business owners that barely scrape by, but would never switch to working a 9 to 5.

Correct, but I feel like you are describing the owner's purpose in starting/running the business, not the purpose of the business itself. I don't know, it is a complicated question and written words are a relatively ineffective way of communicating complex thoughts. Still fun to try though. :)

[chuck_roxas45]

I don't understand all the hullabaloo. Whatever is the intent of a business, if you don't make enough money to keep it going or are willing to inject capital constantly, you WILL close shop.

[twinboysdad]

The purpose of a business?

Snapping necks and cashing checks!

[RamZar]

That's a great multi-barreled question! The answers are not as simple and straightforward as 40 years ago when Spyderco first started. A business may be in it for the profit but there are so many factors involved these days. It's a multi-headed hydra swimming in a pool of spaghetti. :)

[PayneTrain]

Oh this is totally an exercise in semantics, but that's what makes it so interesting! Depending how you look at it, everybody can be right.

My purpose for starting a business (should it ever happen) would be the same as my purpose for just about everything I do. It would just be another means to the same ends that every significant decision in my life is a step towards. But its role in achieving my life goals would be to make the money to allow me the freedom to make those things happen. Even if I operated my very own ski resort (yes, my life is largely driven by the pursuit of snow), the business I ran would exist to make money so I could keep that mountain and my unlimited access to it. Also, of course, so I could fly my private helicopter that my alpine empire afforded me to every other mountain in the world I don't own. Perhaps a network of helicopters in different countries. Might as well keep different skis in each one too, you know, to save time. Cuz time is money and money is snow!

Sorry, where was I? Yeah, so if that business didn't make money, if it couldn't stay open and lost my investment (wherever the heck I got that kinda money from in the first place) and ruined me, it would not have served its purpose. Perhaps it did for a day, and boy what a day, but now it's left me broke, mountainless, helicopterless, and just downright sad. Even though it was directly related to my overall goal, it didn't make me the money I needed to achieve that goal.

You're absolutely right Sal, money is a tool as well. But your knives don't grow in trees, do they? Something has to make the tool too! :D A knife tree...can we explore that idea next?

But yeah, I think it's all how you want to break it down. Like looking at matter which can be broken down into fibers, molecules and crystal structures, atoms, electrons, on and on to seemingly no end, where do you stop to assess the properties of the thing you're interested in? Maybe I've gone too far. Maybe not far enough...

[ZrowsN1s]

I see several mentions of helping the community, offering value/services, pleasing the customer, etc. Beyond the obvious profit aspect, am I the only one who sees running a business as an excellent way of spending a major chunk of your life doing something you enjoy tremendously?
Maybe I'm reading the question wrong?

No not at all. My #2 reason was a sense of purpose. If I expanded on that concept a little: doing something I'm good at, something that I enjoy would aid in that sense of purpose. As opposed to doing a mindless 9 to 5 where my talents are wasted and I have no sense of purpose. Does that make sense?

[harronek]

I'd be interested in knowing how many of the respondents own a business ?
The old adage of " Dog in the fight " might be an important ingredient and hold some weight in the discussion .

Ken

PS - been a successful and satisfied business owner and employer for the last 18 years .

[Xplorer]

or just 'cause I wanna drive a Range Rover.. :p

https://youtu.be/uJ6_t0DUXZo

:D :D

[RamZar]

I am currently retired. I retired very early, because I have been very fortunate.

When I was young, I really believed it was to make money to make myself rich or the company rich.

As I got older I began to believe a company should provide for the employees. Help them be successful. You owed it to them as they did the work. I really feel that you have to be successful so everyone can be successful. It is about the people who work for you and if you take care of them, they take care of you, and provide great customer service.

In the years to come, I will surely start a business and this will be why, to provide for not only for myself but for others.

It is all about the people.

Much luck and success to your business endeavors.

[Ryno]

Despite many's overwhelming agreement, I still do not believe that money is the purpose of a business. Money is the purpose behind a job. (not work, though)...

I agree with this. I meet plenty of business owners that barely scrape by, but would never switch to working a 9 to 5.

Correct, but I feel like you are describing the owner's purpose in starting/running the business, not the purpose of the business itself. I don't know, it is a complicated question and written words are a relatively ineffective way of communicating complex thoughts. Still fun to try though. :)

I guess the universe may value a business differently than the owner does, but the owner gets to decide that purpose and run the business accordingly.

Perhaps there is a big difference betweem the purpose of a business and the purpose of businesses.

[PayneTrain]

I'd be interested in knowing how many of the respondents own a business ?

I think it's fairly obvious I do not, and I'd guess that a majority of members here also don't. I think we're probably a pretty representative sample of the overall population. But you got me thinking, whether we do or do not, is there really a bias? Does it really matter?

Think about it. Employee or employer, isn't the business serving the same purpose? It could be an ideal situation where the owners of the business and the employees all like and enjoy and believe in what they do, or that may not be true for one or either side. In any circumstance, aren't they both using the business in the same way? Whether for just the money or for the fulfillment as well, aren't they both using it to enrich their lives whether directly or indirectly? Though I'm not backtracking on my stance! I still believe no matter which side of the big fancy desk you're on or your motivation for being there, it's all done through money which is what makes it a business in the first place and not a charity or a church or a hobby. But it is interesting to think that even though one person may start a business, it becomes the same tool for everyone involved in it.

Perhaps we're all in the same boat here. I think we all, employees and owners alike, can be motivated in the same ways to do what we do for a living no matter what capacity we do it in. Remember as a teen pondering your future, people would ask you what you would do for free? Then they tell you to go do that for money!