The Purpose of a business

**Derlyn** · 09-Sep-24, 09:52 PM

@Blurock, couldn't agree with you more.

**Blurock** · 19-Sep-24, 02:17 PM

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."

**Blurock** · 18-Nov-24, 08:55 PM

Once we start analysing our business, we realise that we cannot MAKE money. We can only EARN money. We don't have a machine or a tree to grow money, so how do we EARN it?
We earn money by creating a customer to whom we can sell our service or product. If we do it right and if we do it better than the next guy, the customer will come back and voila! you have recurring income!

Don't tell me you're a plumber or electrician that will never see the customer again. He may need you again in the future and will remember the satisfying service. Or better still, he may tell his 10 friends while having a braai. If only two of them use you in future and they tell another 10 people about you.... Get it?

So, the purpose of a business is not to make money. The purpose of a business is to create a customer. Treat them well and you'll have a customers for life.

**Mike C** · 19-Nov-24, 05:21 AM

Originally Posted by Blurock

He may need you again in the future and will remember the satisfying service. Or better still, he may tell his 10 friends while having a braai. If only two of them use you in future and they tell another 10 people about you.... Get it?

And the same is true of poor service. The customer might not complain directly to you, but will tell his 10 friends around the braai ... and your business will start feeling it!

**Blurock** · 04-Feb-25, 08:35 AM

This video just confirms what I believe in.
The purpose of a business is to create a customer. The function of the company is to retain that customer.
Losing contact and seeing the customer's needs and preferences is a recipe for failure.

**Blurock** · 12-Feb-25, 05:20 PM

Now this is how you retain a customer and get extra miles from word-of-mouth advertising!

Thank you for your recent email inquiring about spares or the servicing of your Bissell vacuum cleaner.Bissell has not been represented in South Africa for more than 8 years, and we have recently been appointed to distribute the latest technology in both Wet & Dry vacuum cleaning.
We have made contact with Bissell META (Middle East Turkey & Africa) with regard to your older machine and they have informed us that they no longer have access to the spare parts to these older machines, which are now discontinued.
As a loyal Bissell customer for many years we would however like to offer you the opportunity to trade in your existing machine for the latest technology from Bissell.

I can highly recommend these guys for their prompt replies and excellent service.
The model of our Bissell vacuum cleaner is outdated and spares are no longer available.
To compensate Legends Housewares suggested to trade in the old for a new one. They collected the old vacuum cleaner and the new one is on its way.
The product was on special with a 50% discount plus they gave me an additional 20% off for my trade-in! No courier cost!
This is a company I would support all the way. Customer for life!
Legend Housewares (Pty) Ltd
Telephone:+27 11 462 2250
Email bissell@legend-sa.co.za
Website www.bissell.co.za[/COLOR]

**Blurock** · 10-Mar-25, 10:25 AM

The purpose of a business is to create a customer. The function of a business is to retain the customer. No one can "make money." The customer is your source of revenue. If you lose the customer, you lose your income. Trying to milk a customer for the maximum income means you are not customer-driven but money-driven. If you are trying to make money rather than create customers, you will always lose in the end.

**Tradie** · 11-Mar-25, 07:27 AM

I am in a situation where I have lots of customers who have supported me for many many years (more than 20), adding new customers by word of mouth all the time, in fact to a point that many customers dont share my number because I just get too busy, yes I know you going to say, then you should grow, without capital/money you can't grow.

From my years of experience, there are a few things I have learnt:

You can have a thousand customers, with million rand projects, without the capital to execute the task requested by the customer, you dead before you even get started.

Cash/money is king, no matter how much money you see on paper tied up in contracts, until that money reflects in your account, you dead.

Unless you have a budget or financial support/investors to grow your customer base (who will want to see the profit/money growing), to a point that you make enough money to make a profit/money, you are dead.

The purpose of a business is to create enough capital/money to get started and grow the business, so that you can grow your customer base to support the business and pay back the money.

I would say you need both, because one can't do without the other.

**Tradie** · 11-Mar-25, 07:40 AM

Cut and paste from google....This pretty much puts in in perspective in one line.

"business" generally refers to any activity or enterprise undertaken for profit, encompassing organizations that provide goods or services to the community in exchange for money"

**Blurock** · 12-Mar-25, 08:31 AM

Originally Posted by Tradie

Unless you have a budget or financial support/investors to grow your customer base (who will want to see the profit/money growing), to a point that you make enough money to make a profit/money, you are dead.

The purpose of a business is to create enough capital/money to get started and grow the business, so that you can grow your customer base to support the business and pay back the money.

I would say you need both, because one can't do without the other.

I think you are missing the point. To start a business you need capital. The source of start-up capital is not a customer, but banks, finance houses, friends and family, personal savings or bootstrapping as many small businesses do. There are also many different industries and types of business that have different financial requirements.

Once you have raised start-up capital you need customers to generate an income. Once the business is doing well and you want to expand, you may want to raise money again to grow the business. This may be done via a loan or equity but still relates to the funding and set-up of the business. This is not cash flow but capital. Cash flow comes from customers.

The funding of projects once you have a business is also a different principle and relates to the type of business and the way that the business is run. I.e. in construction you may find a number of companies forming a joint venture as the contract may be too big for one single contractor to fund the building of a road or a dam. That relates to business strategy and business funding. However, you still need a customer to place the order, whether it is big or small. Without the customer you do not have any contract.

So, the purpose of the business is still to create a customer who can give you the order. Do not confuse capital investment in a business with cash flow. Only a customer can generate cash flow.