3 myths surrounding the purpose of business
Much has been published on living a purpose-driven life, and many business leaders try to apply the same philosophy in business. The concept of purpose is however a bit different when we think about it in terms of business.
MYTH 1: Business purpose can be found
The purpose of a business doesn’t ‘magically’ reveal itself. In business, the owners of the business – whether sole owner, partners or shareholders – must simply decide whether the overarching purpose of the business is to grow it, or to sell it, as running a business to achieve sustained profitable growth is quite different from running a business to secure the highest possible sales price.
If the owners of a business decide that they want to grow the business, then they have to make sure that every decision in the business allows it to take a step towards that purpose, not away from it.
MYTH 2: Business purpose is only for certain types of companies
Maintaining a business might appear to be a third option, but even a so-called ‘lifestyle business’ needs to achieve sustained profitable growth to prevent its inevitable end caused by rising inflation, rapid changes to market conditions, unforeseen losses and so on.
Organisations operating for a social cause rather than for profit generation are also not exempt from being clear on their purpose. Most of these businesses will never have the overarching purpose of being sold, so they have to then make decisions on the three aspects of a sustainable business: financial, social, and brand impact.
While the social purpose might be obvious in a non-profit organisation, the focus on financial growth – and the effect of brand impact on that growth – needed to achieve that purpose is often lacking.
The question every owner of every business – irrespective of size or sector – should ask themselves is: If I don’t know where this business is going, how will I know if it is veering off course?
MYTH 3: Business purpose is static
As the purpose of a business can only be decided by its owners, a change in ownership often triggers a change in purpose. Whether through merger, acquisition, or handing over the ownership reins to the next generation, a shift in purpose that is not crystal clear to the owners will result in muddled efforts by everyone employed in the business.
If you are a business owner that employs someone to run the business for you, make sure that they understand your purpose for the business and that they are capable and equipped to achieve it.
If you are the one who’s employed by the owners to run the business, are you running based on your assumption of what the purpose should be, or have you checked with the owners what their purpose for the business is?
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