The Purpose of a business

[Blurock]

No

You are correct. But you have to click on the survey to vote.
People who say yes apparently do not have customers and don't have to find customers. They have a trees that grow notes or have a machine to print money.

All businesses are dependant on customers, whether you are a musician playing to an audience, an artist selling paintings, selling fruit and veg, installing solar, repairing plumbing, panel beating or whatever you do, you need someone to buy whatever you have to offer.

Van Gog is a perfect example. He was a brilliant painter but he had no customers. He sold one painting in his lifetime and died a pauper. Are you a Van Gog?

In my experience if the focus is only on the money and not on the customer, things start going wrong. We start cutting costs by diluting the formula, by inserting inferior materials or products. Reducing staff and appointing less qualified staff at a cheaper rate. Not paying overtime etc which eventually leads to greater staff turnover and inferior service.

If the focus is on the customer and not on the money, you will improve your offering in many ways and so gain more customers who will contribute to your profit.

[Blurock]

Staff is very important in any business. They have to realise that their jobs depend on their customers and not so much on their bosses. The customer is the core of the business and if the customer is not happy, they will leave. Even the party of Ain't No Consequences are starting to realise that as droves of taxpayers are leaving the country due to poor service delivery and corruption.

How often are we not annoyed by staff at checkout points not paying attention, but talking to their colleagues while serving you. No friendly smiles or acknowledgement. People at counters talking on their phones or sending/reading text messages. Restaurants are a good example of indifferent service Not knowing basic etiquette of how to serve wine, or food. This is always a management problem of selection and (lack of) training.

Good staff can be a boon to your business with the right attitude and training. Read the book "In Search of Excellence" in this regard.

[Isetech]

The problem, with reference to trades, we tend to see the amount of hard work we put into making the "boss" rich, without understanding the whole big picture.

The company registrations and taxes, how to manage the money and when to spend and not to spend. I started something a couple of months back and it has turned my financial situation around completely. I have moved from always being in an overdraft to almost in the 5 digit plus, hoping by June to have a R100 000.00 available for the rainy days, which by the way comes and go less frequently, but as you learn to manage your finances and stop just spending on stuff that you dont really need, or spending customers deposits. By the way this is one of the biggest downfalls for many small businesses.

Customer relationships, I have it, where people have worked as sub contractors and think because I offer them a small piece of the pie, they get greedy, without understanding that I have 10 years of good standing with the customer. When you get to 30 plus years in business you learn a few things that you will never learn from business school. Customer may not always be right but you need to respect the customer, do what you say you are going to do, finish projects on time and charge what the project is worth. I had a job last year which ran way over budget, like 200 hours over budget, I could have billed the customer for the 200 hours and they would have paid, however when I was reviewing the bill it seemed a little excessive, so I made a few adjustments and submitted the invoice. I might have lost a few bob, but the word of mouth advertising is worth way more. I would rather have 5 good paying customers, who trust me and I can trust, than 50 000 problems.

Like most things in life, people live way above their means and whine all the time about how they cant get through the month, yet they have all the fancy material junk, just like business, when you earn enough to pay cash for that nice 4x4 double cab with all the trims and a range rover for your wife, kids in private schools, then great, if not, dont show off with stuff you cant afford, landing a R10 M contract doesn't make you rich. I see too many contractors, all mouth and bling and too little cash in the bank.

[Isetech]

Without money there is not business, the amount of money determines the scale of the company.

How you you mange the money will determine the growth or demise of the company.

There many factors to consider that it is literally impossible to know exactly what works for everyone, hence the massive fail rate of companies.

[Blurock]

Without money there is not business, the amount of money determines the scale of the company.

How you you mange the money will determine the growth or demise of the company.

There many factors to consider that it is literally impossible to know exactly what works for everyone, hence the massive fail rate of companies.

Yes, but without customers, there is NO money!
Allow me to illustrate:
No of customers Average Purchase Repurchase rate Total Revenue
1000 ..................R1000 .....................2 ......................R2,000,000
Now lets increase the number of customers by 10% for good honest service and quality products.
1100 ..................R1100 ....................2.2 ....................R2,662,000
Can we perform even better and increase by 20%?
1200 .................R1200 .....................2.4 ....................R3,456,000
What if we increase customers by 50%. Not possible? ???
Everything is possible if you put your mind to it.

My previous business was hijacked by unscrupulous investors who stuffed it up anyway. Staff have been retrenched and it almost does not exist anymore because they chased the money.
I've started my current business with virtually nothing but my good name. It grew trough Covid while some others closed.
Last year my business revenue grew by 168% and more than 50% the previous year.

I am not a genius and have not found a secret formula. I just apply basic business principles and try to keep everything honest.
I've just realised that the customer is king just as much as cash is king.
I don't sell or buy on account. I don't do business with family. I have excellent suppliers and I support them just as they support me.
If there is a problem, I solve it as quick as possible or put pressure on the supplier or responsible installer to fix it.
No business exist without a problem or a difficult customer. Pay attention to those complaints as they become your most loyal customers.
I am jealous about my time and do not waste time on trivial pursuits that does not add value to my business.
Focus on what is important and become a champion in the industry that you are in.

So do you realise what the purpose of a business is? A business has Two basic functions; Marketing (to get more customers) and Innovation (to retain the customers).
Do this right and you won't have to worry about "making money".

[Blurock]

So I think that we can agree that we do not have a tree or a machine to print money. Money has to come from another source, the client or customer.
Do your staff know this? They should also know that the customer is king and should be treated as such.
Staff should also realise that they have internal customers (and suppliers). One department relies on another to deliver so that they can perform. A good example of this is a symphony orchestra where the soloist cannot perform without the backing of the full orchestra and conductor. One false or missing note can ruin the performance.
Actors cannot perform without a wardrobe, makeup, lights and a support team.

In the late 70's consultants at McKinsey & Company developed the 7S model. It is based on the premise that an organization's effectiveness depends on the alignment of seven factors: strategy, structure, systems, skills, staff, style, and shared values. Does your staff have the same vision and focus and do they share your values? If not you may find it difficult to manage and do business.

[Justloadit]

In my opinion, the purpose of a business is to make money.
What is important, is what service you provide, and product do you supply for the money you expect to make.
Running a business at cost is not a business.

The same question can be applied as follows:-
Do you work for your business, or does the business work for you?

[Blurock]

This article by Pavlo Phitidis supports and illustrates my philosophy that the purpose of a business is to create new customers.

How to Boost Team Engagement by Focusing on Product, Not Just Financial Metrics (edited)
A business owner was struggling to get his team more involved in driving the company's growth. His goal was to increase revenue and his logic was straightforward: as the company grows, so do opportunities for everyone involved.
They removed financial targets from the conversation and shifted the focus to the company's products and how they directly impact the lives of customers. Aligning the team with the purpose behind the product, resolved much of the disengagement.
The business owner had previously focused solely on revenue numbers. But we redefined growth in terms of units sold, shifting the emphasis from money to the product's value. Every product sold represents a unit of revenue. To meet future forecasts, the company would need to sell five times the current number of units.
By approaching the problem this way, the focus shifted from abstract financial goals to concrete actions that positively impact customers. When the team understood that selling more products directly enhances customers' lives and experiences, they became more engaged. It gave them a clear direction and a sense of purpose beyond just increasing revenue.
The Power of Purpose in Team Engagement
This product-focused strategy helped the entire team gain clarity on what to focus on, where to direct their energy, and how to achieve collective success. They no longer viewed their work as simply contributing to the company's financial gain. Instead, they saw how their efforts could make a difference for the people who use their products.
By "productizing" the numbers, the team became more aligned and motivated. This approach created a broader sense of purpose and highlighted how their work contributes to something bigger than just the bottom line.

In reality, a product alone cannot generate an income. Every unit sold, was sold to a customer, because the product was aligned to the customer's needs. Now if you satisfy that need better than your competitors, you get recurring or repeat sales, which works like an annuity, ensuring a constant flow of revenue to the business. So, in the words of the marketing guru Peter Drucker, "the purpose of a business is to create a customer."

[Derlyn]

My little one man business has never been about "making money".

Being my own boss has afforded me the flexibility of being able to follow my passion and do what I want to, not what the boss tells me to.

I've been a fisherman, chicken salesman, car dealer, nurseryman and electrician along the way.

Every venture of mine has been successfull. The fact of the matter is that I have never measured success by my bank balance, but by the number of people I've helped and made happy. I always strive to ensure that the value of my service is more than what I charge the client. I've never been without an income and not once in my 66 years can I remember ever going to bed hungry.

My very simple philosophy has treated me well. I am truly blessed.

I am still referred to by some people as the chicken man even although I stopped selling chicken about 25 years ago.

Blurock is correct about the supplier being able to make or break a business. That's what brought my thriving chicken business to an end. A greedy supplier.

I have a house, a car and a pantry full of groceries, but cannot take any of it with me one day. The only thing I will be taking with me is a number. The number of people I've helped and made happy. The bigger that number, the better. Having my own businesses has certainly made that task a lot easier.

[Justloadit]

@Derlyn, I agree success is not measured by the bank balance, but with out a bank balance you can not follow your passion, as you will not be able to afford to.

So the profit from your ventures funds your passion, and in the end means the business is about money.
The difference is, do you sell your soul for money?
On many travels, I have had to remind myself that these rough stones I am stepping on is part of the path I have to travel to enjoy my passion, and if I don't have some money at the end of the trip then it will not allow me to enjoy my passion.
Your passion can not always provide if it can not make a profit.