Businesses must not lose sight of why they are in business and it should be about more than just making money, writes Berman Fisher’s Arthur Dzahghouni.
That song, “Price Tag” by Jessie J, has been playing in my head since I heard it on the radio a few weeks ago. The catchy chorus may have nothing to do with our daily lives, but it did bring to mind a question I keep coming across with many businesses and business owners: “What are we about?”.
It seems like a very obvious and existential question to ask business owners, but I think it is one that is important for management to answer; ideally in two sentences or less. Although each business is unique and has different goals, there is one thing that is clear: the mission statement of any business is never purely “to make money”. Money is and must be a bi-product of fulfilling the right mission. Even the United States Federal Reserve’s original mandate is not “to make money” (although this is sometimes hard to believe) but, according to its website, “to maintain maximum employment, stable prices and moderate long-term interest rates”.
This “it’s all about the money” misconception appears to infiltrate all businesses at some stage or another. I’ve seen many successful businesses, which started out by fulfilling a customer need or providing a great service, lose their focus over time and start to believe their main mission is simply “to make more money”. Sometimes this happens when new management takes over from the founder and no longer adheres to the founder’s original vision. The negative consequences of this are even more apparent when a lack of attention is given to the customer and the focus instead turns to increasing prices or lowering costs. Unfortunately the impact of this lack of customer focus is not always apparent in the short-term. In fact, profitability may actually increase in the short-term. The long-term consequences, however, are usually felt when customers notice a drop in the quality of the product or service in question and move their business elsewhere. One must always remember – the customer is the boss and is always right in the long run.
In order to avoid such a scenario, all businesses should ask themselves the following questions: Why do customers give us money, what service or product do we really provide and what customer needs are we fulfilling? The answers to these questions should help management identify what the real mission of the business should be and where they would be best placed to focus their energies. Again, taken at face value, these are very straightforward questions to ask. The temptation is to take the easy route and answer them based on the most obvious product or service being offered. For instance, “we offer insurance services”, “we sell alcohol” or “we repair cars” are all legitimate answers to these questions. However, they are also a very shallow way to look at ones business. I would therefore follow up with questions such as “what are you really selling” and “what differentiates you from your competitors”?
By taking the time to delve a little deeper, the true business offering tends to reveal itself. The insurance company realises they are in fact selling “peace of mind” to their customers. The bar owner, as with most bar owners, realises he is selling “ambiance” above all else. Finally, the reason I take my car to my repairman is because I trust him. These answers aren’t the same for all businesses and can be completely different even amongst businesses in a similar product category, such as cars.
In conclusion, if you are a business owner or on the board of an organisation, block out an afternoon over the next few weeks and find out the real “raison d’être” of your organisation. In my experience, once an organisation figures this out, all other business decisions – staffing, training, spending, etc – become much easier to make.