Purpose of Business: Why Businesses Exist

Let's talk about the purpose of business. The two reasons that your business should exist and how to get focus and direction.

Vanessa Shaw here, your Business Growth Mentor with the answers to your questions regarding growing your small business.

People are getting this way too complex. I recently did a whole thread in my Facebook group and asked people, "Why do you think your business exists? What's the purpose of business?" 

It was amazing just how many different responses there were. The truth is your business can give you a lot of different things. However, if we don't bring it down to the two very core reasons that your business should exist, you're going to overcomplicate things. You're probably going to get very scattered and overwhelmed.

Purpose of Business

Here's the first reason your business needs to exist. It's to add value. That's it. To add value to other people. Other people's lives or other people's businesses. That is the core reason a business exists.

Now, what does that really mean? I see people questioning, "What does that mean and how do I add value?" Adding value is simply about being able to solve a problem that somebody's facing. Or, help them achieve a goal that they want to achieve. That's it.

A lot of the problems that you could be solving for people are probably things that come relatively easy to you. As a result, you undervalue your level of expertise. It's really easy for me to get my eyes on somebody's business and see exactly where they need to change things.

For my videographer, it's just so easy to show up, to set up our studio, to film, to edit the videos. This is part of her area of the expertise. That's very valuable to somebody that either doesn't have the time to do it themselves or simply doesn't have the skill set.

Are You Helping to Solve a Problem?

I want you to think about what are some of those problems that you help people solve or goals that you help people achieve. By the way, if those things come really easily to you, those are the things that you should be charging the most for.

Your business isn't supposed to be really difficult. There's going to be plenty of challenges and plenty of ways for you to grow in your own leadership without trying to solve problems that are really difficult for you to solve.

So that's the first thing, all about adding value.

Is Your Business Profitable?

The second reason your business exists is to be profitable. It is to be profitable to actually make a profit. That's about covering all of your expenses, including paying yourself a reasonable salary for the amount of work that you're doing and the hours that you're doing. And having money left over.

If your business isn't profitable, you're going to be detracting value from somewhere else and from somebody else. Let's just think about that for a moment. If you can't pay your bills, if you can't keep up with your financial commitments, somebody else suffers. If you default on a payment, somebody else pays the price for that. If you can't support yourself, if you can't contribute to your own household, somebody else is missing out.

Adding Value in Business

It kind of flies in the face of adding value if you're not making a profit, at some level, you'll be taking away value, and therefore it becomes a big contradiction. Yes, your business should be profitable and as a service-based business owner, there is no reason why your business can't be profitable very early on.

I get it that there are things that we have to invest in, skills that you need to build, certain equipment and programs that are going to support you. The truth is that a service-based business has the greatest ability to be profitable because there is not a lot of development cost to get you up and running.

So two reasons for your business to exist:

1. adding value - be sure that you're adding value and solving real problems
2. knowing your numbers so that you can be profitable