What's the Real Purpose of Your Business?
Understand Your Business Purpose
Imagine dog owners in your neighborhood feel lazy to take their dogs out for a walk during weekends. So you propose to take their dogs out for a walk for a nominal fee during weekends. Your solution to an existing need of your neighbors has led to the creation of a business. Over time, as more people reach out to you, you hire additional staff to expand your services. Slowly you have managed to build and scale your weekend dog walking business.
As kids, most of us would have built sandcastles on the beach. We built a sandcastle, hoping that it turns out to be beautiful. We started building to avoid being bored in the beach and also share our joy with our parents or friends. In simple terms, that’s what a business is, but on a larger scale.
Business can't be not just about making money; it is also about creating something that matters to you and others. We are not just selling a product or a service but solving a problem or fulfilling a need while building a community around it. This article explores the core purpose of a business and why defining a clear purpose provides us a guide to navigate the choppy waters. Most founders clearly state that clear purpose drives passion within us, solve problems, easing our efforts to build a sustainable business.
Key Takeaways
- Business exist to identify needs and fill them, creating value by solving problems while building communities, not just generating revenue.
- A clear purpose drives passion and provides guidance, helping founders solve problems effectively and build sustainable business beyond revenue and profit targets.
- Like a tree with purpose as roots and customers as leaves, businesses need strong foundations to create unique value propositions.
- Successful businesses address fundamental needs, keep customers happy, and contribute positively to culture while continuously adapting to environmental changes.
- Business purpose connects to broader ideas, allowing for collaboration opportunities and creative problem-solving when founders clearly understand their "why."
Fundamental Needs
At its heart, a business exists to satisfy human needs. Think of it like this: if no one needed your product or service, why would they pay for it? Long ago, Peter Drucker, father of modern management, clearly stated that :
However, it doesn't stop there. We need to keep that customer happy. Theodore Levitt, known for popularizing HBR stated:
The true purpose of a business is to create and keep a customer, not to make you money
Hence for any business to survive, we need to understand what people want and deliver it better that anyone else. Business needs to provide value, something that makes customer lives easier, or better, or more enjoyable. This value can be tangible, such as a tool that fixes a problem, or intangible, such as a sense of belonging.
Revenue is the force that sustains a business, but bear in mind that it is a consequence of creating value to customers. As water and nutrients allow a plant to grow, revenue provides the momentum for a business. The foundation of any business is an understanding of the problem we are trying to solve for someone.
Visual Framework
Imagine the business we aim to build as a tree, then
- The roots represent the fundamental needs our business is addressing
- The trunk is the Business Model, i.e. generating revenue from the value we provide
- The branches are our products and services, each suited to meet different aspects of that need.
- The leaves are our customers, thriving only when they're nourished by the tree.
If the roots are shallow or the trunk is weak, the tree won't flourish. This visual should helps us see that a strong, clear purpose is essential for a sustainable business. It's not just about selling leaves; it's about nurturing the entire tree. The analogy breaks down when we think about the complexity of the market, but it serves as a simple way to visualize the core purpose.
Building on this, always bear in mind you're not just solving a problem; you're also creating value. This means our product or service needs to be unique. Just like how a chef adds a special ingredient, we need to offer something that others are not currently doing. This is our unique selling proposition (USP). But it's not just about the "what," it's about the "why."
- Why does your product matter?
- How does it improve people's lives?
The “why” needs to resonate with customers on a deeper level. Additionally, businesses need to reflect and contribute to the culture surrounding them, similar to a community garden where both the business and its surroundings thrive. Social Enterprises take this further by prioritizing a “social mission,” reinvesting profits to make a positive impact.
To survive and thrive, businesses must adapt, just as a chameleon changes with its environment. This requires being open to feedback, innovation, and continuously learning. Asking “why” serves as a powerful tool for discovery. A common misconception is that profit is the sole goal, but it’s a natural consequence of effective problem solving.
Practical Applications
Let’s see how this works out in real life. A tech startup could create a user-friendly app that solves the problem of inefficient communication, making money and making a positive impact. A local bakery could offer fresh, high-quality bread, contributing to the community’s well-being. A social enterprise could tackle environmental issues, promoting sustainability while making money. In each case, the business addresses a need, creates value, makes money, and contributes to culture.
This requires clearly defining your target customer and understanding their needs. We need to develop a unique value proposition that sets us apart. We need to build a sustainable business model that generates revenue while staying true to our purpose.
Interconnections
Your business purpose isn't isolated; it's connected to broader ideas. For example, your purpose might align with sustainability, connecting your business to environmental movements. Or it might focus on education, linking you to the field of educating others. Understanding these connections can help us in observing the the bigger picture and identify opportunities for collaboration.
When we are clear on our "why," we are more likely to find creative solutions. This understanding is a foundation for learning about related concepts such as market analysis and planning.
Testing our Understanding
Imagine you're starting a business that sells reusable water bottles. Prior to staring our business, we can ask yourself the below questions:
- Are we addressing a customer need?
- If yes, How does our solution address the customer need?
- How does it create value?
- How can it contribute to the community?
Now, consider a scenario where your sales are declining. We can then proceed to ask ourselves further questions on this matter: - What steps can we take to realign with your purpose?
- Can we explain to a child the purpose of our water bottle business?
These thought experiments challenges us to to apply our understanding and see the concept from different angles. Solutions include re-evaluating the product, focusing on the “why” of reduced plastic waste, and engaging with the community.
Conclusion
The purpose of any business is more than just making money. It's about creating something meaningful that addresses a need, provides value, and contributes to the community. It is our guiding star, providing direction and motivation. By focusing on solving problems and building a strong community, you can create a thriving business that makes a real difference. Remember, the true measure of success isn't just profit; it's the positive impact you create. Your business's purpose matters because it reflects your values and shapes your legacy.