The Daily MBA

Tips, Tools, and Techniques to be a Better Entrepreneur

Topic #1: What Is Business Anyway?

Talking Points

  • An organization consisting of one or more people providing goods or services for the benefit of customers and the community
  • Groups of organizations that produce or sell similar goods or services
  • The transitions that enable producers to sell to customers
  • A legal entity that can generate and consent to contracts in order to produce goods and services
  • Also known as a firm or enterprise
  • All businesses have objectives that are summarized in their mission, vision and values statements

Discussion

What is business? We interact with them daily, yet putting into words the core of business is daunting. The term business has many definitions from the practice of to the type an entity is engaged in. A business can be as small as a single person or as large as a multinational conglomerate. They are as diverse as the people who run them. At the core of a business is some goods or services that is offered to customers. All businesses provide some form of product or service to someone. Most, provide them for profit.

For our Purposes

It’s important to define what a business is before we discuss how to manage them. All our discussions will tie back to this definition. This series will use the follow definition for a business:

Business: An organization of one or more people providing goods or services for the benefit of customers and the community.

Notice that our definition does not include profit. This is an important point. Some business do generate profit but there are several others (government, education and non-profits) that provide valuable goods and services for no profit. Without these organizations, society would not function. The principles in this series will apply to all businesses since, fundamentally, they all serve a customer.

Another aspect of the definition is the inclusion of community. All businesses impacts the community. Businesses create jobs, provide essential services and pay taxes. Without a thriving business base, there is no community. That’s why a business also needs to understand its impact on the community. Now that we have defined what a business is, we can now figure out how to manage them. The first step is to clearly define what the objectives are. These objectives are summarized in four statements: Mission, Vision, Values and Mantra.

Mission

Mission statements describe the reason the company exists. It focuses on the present and is used to align the firms employees to a common cause and to communicate that cause to the public. The mission statement should clarify the organizations purpose.

Vision

Vision statements describe the future the company wants to pursue. It’s the future state that the business has not yet achieved. Most vision statements are long term (10 years or longer). Vision is the big ideas that the company aspires to.

Values

Values are what the business believes in. Values define how they want their employees to behave. The companies values are how it conducts business and how it treats employees, customers and the community. These tenets guide the everyday operations of the business so that the mission can be sustained and the vision can achieved. Without a well defined mission, vision and values a business will be impossible to manage. These statements are the guiding principles in which all business decisions are made.

Mantra

Guy Kawasaki (see below for the whole article) likes mantras instead of a mission statement. His thinking is that a mantra is easily remembered, short and focuses on your real core. Mantra’s need to be short since they are an object of concentration during a prayer, mediation or incantation. Having a well crafted mantra that is easily remembered is a great addition to a formal mission statement.

Things To Ponder

  1. What’s the Point? Visit some of your favorite businesses and figure out why they exist. Do they have a mission statement? What do they stand for? Ask the owner what they think.
  2. Work for Free: Think about what you would do for free. What organizations do that? Would you work there for free?
  3. Community Impact: List three or four businesses that have both positive and negative community impact. What keeps both types in business? Write a sentence as to why they are positive or negative.
  4. Mission, Vision and Values: Look up some mission, vision and values statements and choose the best and worst. Write a paragraph on each one explaining why they work or totally miss the mark.
  5. Mantras: Research some corporate mantras. How do they compare to the mission statement? Which is easier to remember?

Exploring Further

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