It has been a busy week. I have added a new set of business building activities to my schedule and added several more working hours to my day (I’m now up at 5 AM following Hal Elrod’s Life S.A.V.E.R.S morning routine). Good stuff that I will report back on soon!
What is the Purpose of My Business?
I’m putting together several online classes this year (check back often!) and that thinking it through brought me back to what seems an age-old question: What is your purpose in this business?
I decided to explore the question so that I could better frame it. A Google search quickly resulted in plenty of answers to this question, but most fit larger businesses. I was looking for a way of answering the question that would fit a solopreneur that is actively building a business.
I decided to research the question so I could better frame it. In this post, I will share some of my key learnings.
I started with the academic literature (I tend to read several articles per day). This is what came up:
The purpose of a business is to make a profit for its owners or stakeholders.
Yikes! That sounded completely academic and even more like something I would hear from my CPA. I was not inspired.
It turns out the idea has origins from a rather famous article published in the New York Times by an economist by the name of Milton Friedman. He argues that corporations should not concern themselves with social consequences and pursue profitability instead.
While that rings true to a degree from a corporate point of view ( corporations have shareholders, solopreneurs rarely do), I still found it debatable. My mind raced back to a masters degree course I took in college in management and how negative externalities (costs or born by third parties) were caused by corporate actions. Given Friedman’s view, thinking about externalities would just be a waste of time.
I stopped this line of research here; I know how important profit is to any size business. A business must realize a profit to sustain itself and profits are distributed to owners or shareholders. This is how a business functions.
The notion of purpose is a higher calling in my view and this answer just did not satisfy me.
I continued searching.
To Create a Customer
I then stumbled upon one of my favorite resources for business insights, Peter Drucker. He is widely considered the father of modern management. I find his writings logical, insightful and practical. Here is his idea of business purpose from his famous book Management:
“With respect to the definition of business purpose and business mission, there is only one such focus, one starting point. It is the customer. The customer defines the business.” – Drucker, Peter F. (2009-10-13). Management (p. 79). HarperCollins. Kindle Edition.
The customer, in Drucker’s view, is the starting point of any business. Without the customer, the business does not exist. As always with Drucker, his concept is clear and actionable. One does not have to look far to see businesses struggling or closing because customers have shifted their preferences. Businesses that are focused on customers will shift strategies as customer preferences change. So, somehow the focus on the customer has to be part of the business purpose.
One more sentence in Drucker’s book caught my attention.
“Only a clear definition of the mission and purpose of the business makes possible clear and realistic business objectives.’ – Drucker, Peter F. (2009-10-13). Management (p. 75). HarperCollins. Kindle Edition.
This is why I needed to know clearly the purpose of my business. Without it, I would not know the direction my business is to take. This is why I love reading Drucker!
Despite my satisfaction reading Drucker, I continued researching.
To Realize The Potential of the Entrepreneur
Working with entrepreneurs over time has taught me that the entrepreneurial journey changes an entrepreneur’s behavior. To succeed as an entrepreneur, you have to learn to do things in new and different ways. I have seen an entrepreneur’s confidence grow, and happiness increase as their behaviors change (creating the right results), and the business becomes more successful.
There are studies in academia as well. One article, in particular, caught my eye. The article, titled “Self-Actualization: The Zenith of Entrepreneurship“, looks at the concept of entrepreneurial drive through the lens of Maslow’s Hierarchy of Needs.
Here is the passage that got my attention:
“The authors conclude that the respondents in this study who displayed higher entrepreneurial drive did view their businesses as vehicles for achieving self-esteem and self-actualization. Those respondents displaying lower entrepreneurial drive viewed their firms as vehicles for providing basic financial needs.” (pg. 57)
The article is not the most persuasive in its presentation of evidence, but the rationale struck a chord. The key is how the entrepreneurs viewed the purpose of their businesses as it relates to their needs. If the drive of the entrepreneur is to create a business that provide basic financial needs, that is the kind of business they create. Alternatively, if the drive of the entrepreneur was self-actualization, that is the kind of business they created. The business is a means to an end, and that end fulfilled a need by the entrepreneur. This represents their personal purpose for being in business.
That an entrepreneur seeks self-actualization also made sense to me as part of a business purpose.
Making a Difference in the World
My next insight came from a familiar source. Few will argue with that Steve Jobs created a remarkable business with Apple, and his writings and statements are continually scrutinized. What would Steve say was his purpose in business?
Turns out, he did have something to say about it. Check out this article for one possible answer: “Steve Jobs described Apple’s purpose in 2 perfect sentences when he was only 22“. Here is the key quote:
“Our whole company is founded on the principle that there is something very different that happens with one person, one computer … What we’re trying to do is remove the barrier of having to learn to use a computer.”
The purpose of Apple, therefore, was to remove the barrier of having to learn to use the computer. If this is true, the purpose was never just to build computers. Computers were a vehicle, or a means to an end. The purpose was to simplify using computers and reduce the learning curve. Think of every Apple product you have used and you will see that idea in action.
I think Jobs was on to something here. What I liked about his statements is that I can see elements of everything I had read up to now. Looking at Jobs business purpose suggested an approach that solopreneurs could use too.
An Approach to the Question
So what did I learn through all of this research? Here is a quick summary.
A product or service is a means for:
- A profit for the business
- To fulfill the wants of the customer
- Self-actualization of an entrepreneur
- Making a difference in the world
That leads me to the an approach for framing the purpose question.
It is through offering a product or service that connects everyone inside or outside a business to its central idea or purpose.
Think about this for a moment.
Why does a product or service exist? Why does a business exist? A product, service, and business has to stand for something. That idea is the purpose. It is the bedrock of a business.
So how might a business purpose be framed? One way might be to frame the question by asking what is the business trying to do for the customer. What does the business seek to accomplish?
I can see several benefits to solopreneurs in stating the business purpose this way.
- Problem Focused – The purpose of the business would be focused on trying to solve the customer’s problem. Solopreneurs can have this in the back of their mind and always be checking their offerings as to whether or not there achieving their stated purpose.
- Creates a Customer Orientation – The purpose of the business would be grounded in the perspective of the customer. It is all too common for soul printers to think about business from their perspective since that’s what they deal with every day. A solopreneur asking themselves what they are trying to do for the customer puts the solopreneur squarely in the customers shoes.
- Allows for New Approaches – The product or services is a means to an end, not the end itself. This would allow solopreneurs flexibility in coming up with new ways to helping the customer solve their problem. They won’t be anchored in the current product or service they are offering.
- Motivating All Involved With The Business – The business purpose would be extrinsic to the business, allowing for employees and other stakeholders to take ownership.
- It’s Easy to Communicate – This allows the business purpose to be stated in one sentence. That sends could be included in just about any sort of marketing material.
This is all early thinking, but I think it’s well worth exploring.
I began this learning journey with a question: What is the purpose of my business? What I have uncovered is an approach to answering that question. I don’t see this as the kind of question you answer quickly. I’ll spend some time with it and see where it takes me. I’ll report back when I do.
In the meantime, what is your purpose in business and how did you answer it?
Also published on Medium.