Purpose of a Business?

[MichaelScott]

Business is one activity that functions in conjunction with others in a reciprocal relationship. An arrangement in which all parties benefit. So, in that regard, the purpose of a good businesses is to provide and receive value. When that balance is not present, the relationship will eventually fail.

[Evil D]

There really isn't a simple answer on this, because there are so many possible goals of a business that you would have to define before trying to answer the question.

For example, if your business is a non profit charity type organization, then your purpose of business is going to be very different than say a oil/petroleum business where making money is the primary goal. Are you simply selling a product for the purpose of making sales and income, or are you trying to improve peoples' lives? The purpose of business for a dentist is very different than the purpose of business for a gunsmith.

Beyond all that you have differences between large corporations and small business. Even within the same industry, if you compare Spyderco to a larger knife company like Victorinox, the business goals are likely to differ once you start moving past the primary goal of making money. In the beginning I'm sure Spyderco started out as a means for Sal to support his family, but once you move past the financial goals of the business you start to see what the man himself wants to achieve with his business (or by comparison what a larger corporation's goals are) and that is a much broader topic. I would assume that somewhere in Sal's progress with the company he probably envisioned passing the torch over to Eric if he chose to follow in his father's footsteps, and then the purpose of business becomes far larger than just making money. Then your business becomes more than your source of income and even more than your career, it becomes your family's legacy.

Business always begins with an idea, so what is the goal of that idea? Is it to make ones' fortune or is it to change peoples' lives? Or both? When Henry Ford started mass producing the automobile, he probably had both goals in mind, and in fact any successful business has to balance financial goals with any other goal they have if they expect to survive.

So, I would answer this question with another question. What is the purpose of the businessman?

[Surfingringo]

I agree with EvilD that there is no simple answer but there have been some superb posts in this thread. I have found something to agree with in nearly every person's interpretation.

[chuck_roxas45]

Would a non profit organization be called a business?

[hudsonhawk]

So, for the purposes of discussion, what do you think the purpose of a business?

Naturally I have my own opinions, which I will share, but I'm curious as to what you think?

sal

Sal,

I personally feel that a business is an organism that goes through a full life-cycle:

-Initially a fledgling business grows. It grows it's size, customer base and product line/offerings. Initially a business is small and doesn't need a lot of revenue, customers, or product to necessarily grow, but to keep growing it has to increase all of those.
-Once a business reaches its second stage, it usually has found a healthy balance of size, customer base and revenues. Many businesses can stop here and subsist on this for as long as there is a demand for their product.
-If a business chooses to grow into maturity, then more growth is required. For most businesses this means expanding their customer base, size and product lines.

If a business reaches maturity, then I think that their mature purpose should be:
-Continue to provide the level of quality that initially drew their customers to them.
-Continue to provide the soul and beliefs that initially started and grew the business.
-Give back to the community and customers that nurtured them.
-Continue to grow or maintain an equilibrium for as long as they can provide the same level of expected quality for their customers.

Many times businesses either outgrow themselves, or fail to keep bringing in the ever-increasing "food", new customers and more revenues.

The heart and soul of a business is the leader. I got a lot out of reading "Good to Great" by Jim Collins. It studies why some businesses fail and why some succeed. It's a great book and very detailed, but the bottom line is that businesses need a great leader to make them great.

[chuck_roxas45]

After all that, can we say now that the purpose of a business is whatever the owner wants it to be?

[PaleMoon]

Reading most of the answers, I'm thinking either I'm an incredibly selfish individual, or a lot of people are speaking more from a theoretical point of view than from personal experience :)

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? I used to work for the tax department of my government, and waking up in the morning was always a dreadful experience. Now I actually look forward to going to work every day, even though my work week went from 37.5 hours to 60-70 hours. Of course, this can be achieved just as well through regular employment, but in my case it was a pretty big factor in taking the plunge and starting my business.

Maybe I'm reading the question wrong?

[SpyderNut]

Reading most of the answers, I'm thinking either I'm an incredibly selfish individual, or a lot of people are speaking more from a theoretical point of view than from personal experience :)

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? I used to work for the tax department of my government, and waking up in the morning was always a dreadful experience. Now I actually look forward to going to work every day, even though my work week went from 37.5 hours to 60-70 hours. Of course, this can be achieved just as well through regular employment, but in my case it was a pretty big factor in taking the plunge and starting my business.

Maybe I'm reading the question wrong?

I think you are definitely on the right track. :) Each person has a propensity to see things differently based on their individual perspectives, experiences, and ambitions. For what it is worth, I agree with you 110% regarding being able to make a living by doing something you actually enjoy doing. I applaud you for making your dream become a reality. (That is a goal of mine too and one that I am presently pursuing. :))

[sal]

Hi Pale Moon,

This is a dialectical discussion where we all get to learn. I think the various levels or stages of business and the amount of growth mentioned has its truth. Gail and I began our business in 1976 with $250 and we were living in a converted bread delivery truck. You can be sure our main "purpose" was to get gas to get to the next show and to buy groceries.

sal

[chuck_roxas45]

Hhhmmm sometimes trying to be profound sounds like c**p...

[PayneTrain]

I think a lot of folks are thinking of what the purpose of a business should be, and are answering that spectacularly. I would love to have any and all of you on my team should I ever decide to go into business, and it would undoubtedly be successful! Not only that, but I would feel great about what we do completely independent of the success. And I think we all have had a good example to glean from.

But you bet your bass that we'd be in business to make money! Or dough, or cheddar, or heck, even duckets would be fine! Cuz without that, none of our goals would be furthered any more than if we all organized and just walked the Earth telling people about them, or gathered on a forum and talked about them over hot apple cider. Though I wish that were a way, cuz I'd be making a killing right now!

But no, I think all the ethical code and social and environmental responsibility and personal goals are things to take and apply to a business. The business is just a tool, a cold, soulless tool that is used to achieve goals and make something greater than oneself. Just the way a hammer drives nails to make a house, or a knife cuts paper to make...a mess...ok ok cuts meat to make dinner to feed a family, a business makes money to realize dreams, good or bad! One person can use a knife to feed a hungry family or save a suffocating pelican, and another can use that same tool, that same knife to kill a dozen people. One business can progress humanity as a whole, while another business can almost single-handedly destroy the world and kill us all. But they're both business, both making money, and both based on someone's goals and dreams. Just like any tool, what it does all depends on the hand that wields it.

Now there are other ways to achieve goals. Non profits, community organizations, one man crusades for justice, simple home hobbies, anything you can imagine to get something done without involving money. They're all tools too. You can make that same house with a nail gun or a rock or heck, drive nails with your cell phone if you can! You just gotta pick the tool that's appropriate for your goal or dream. The business is the tool that gets it done by making money. Come to think of it, maybe nail gun should have been the business analogy...

That's how I see it. I'm trying to take a more objective, dictionary definition type approach to the question of "what is the purpose of a business". I hope I've entertained!

[yablanowitz]

Hi Pale Moon,

This is a dialectical discussion where we all get to learn. I think the various levels or stages of business and the amount of growth mentioned has its truth. Gail and I began our business in 1976 with $250 and we were living in a converted bread delivery truck. You can be sure our main "purpose" was to get gas to get to the next show and to buy groceries.

sal

I'd say your "purpose" was to make money. Gas and groceries were goals, the "why" you were doing it as opposed to the "what" you were doing. But again, I may be over-thinking or misunderstanding the original question.

[sal]

Well, IMO, even money is a tool. I think obtaining power would be up there near the top. Power to do whatever you wish to do.

This is a great discussion, thanx much.

sal

[mb1]

I would call that freedom Sal. I'm a corporate slave, so that's a fantasy concept for me.

Along these lines I believe time is the most precious resource. It's what the most successful businessmen seem to value as it can become exceedingly scarce.

[sal]

Hi MB1,

I agree. In my opinion, All things yield to time except truth. Without time, everything would have to happen at once. Even thought occurs in sequence and sequence requires time. As one becomes more and more aware of time as a finite (eg: a lifetime) values adapt.

sal

[Archimedes]

Well time is a very important concept. If you have enough money you can do what you want with your time. It sounds great and it is for a while, to do nothing, or be fee to do what you want. I found personally that a person also needs purpose. You have to have something that drives you, a passion. Because to much free time can be a bad thing. I think this is why so many successful people who could afford to do nothing are always working and striving to do more or better.

[Dr. Snubnose]

The question was asked, basically...what is the primary purpose of business, the most likely response would be "to make money". However, this is an unsatisfactory answer since it clearly doesn't provide sufficient justification for businesses to exist. There is no question that we all need and use money in our daily lives, but similarly this would be an unsatisfactory answer to justify why we work. The only legitimate answer can be to provide goods and/or services and make money as a result. ...Doc:)

[CoryMc]

To provide the highest quality environmentally sound products at a service level beyond your customers' expectations.

[jdw]

I work for a non profit organization. To me, business whether for profit or not is a service. You need
to meet the needs of the people you serve, which isn't always easy since many people have many different needs.
To be respondent to the most number of people is key to me in any form of business. That is often confused with
what is most profitable. A business will be successful by serving people and not by measuring profit margin......and by
giving back to the community where you live.

[O,just,O]

I am a small business owner.
The purpose of my business, as I see it, is to meet my Gov't requirements. They require an entity to tax & licence, while insurance requires an entity to blame.
The legal entity of my business can claim cost of doing business such as motor vehicle, tool depreciation & major capital costs against my tax payable. My business also collects GST tax on every transaction to pay to the Gov't.
All these big brother controls on my life operations is the purpose of my business entity.
In a truly free world I could still do exactly as I do each day in my work without the encumberment of this business entity.
My wife & my accountant say that I am a charity for old ladies. So be it, I like that definition.
Business is because the coinage has the superscription of Gaius Julius Caesar on it & he demands his due.
Now our own business is another thing.
O.