The Reason Your Company is In Business

by Sharlyn Lauby on February 24, 2011

. . .to make money.  There, I said it.

I saw a recent comment from someone who said that the reason businesses exist is to do good things for their employees.  Um, nope.  Sorry.  That’s an important thing for them to do, but not the reason for their existence. Big difference.  Huge.  Again…the reason businesses exist is to make money.  Make no mistake.

Now, that being said, there are two things to remember about your business:

1)       How you make that money defines you

2)      How you spend that money defines you

It reminds me of a favorite quote from Reverend Run – “You can’t help the poor if you’re one of them.”  A business can have all of the best intentions in the world.  It can want nothing but the very best for its employees.  It can be a good community citizen and supporter.  But if it doesn’t make money, it won’t be in business very long.  And it won’t be able to do all of the wonderful things it wants to do for its employees and the community.

Harvard Business Review published a series on rethinking capitalism recently.  You can check it out here, here and here.  While I don’t think it changes the fact that businesses need to make money in order to survive, the series does delve into what people are looking for in the companies they do business with.

They want to do business with honorable, credible, ethical organizations. (i.e. how you make money)

They want to support companies that give back to the communities that support them. (i.e. how you spend money)

Businesses need to realize that customer loyalty and capitalism are not mutually exclusive terms.  Companies that build a reputation (or dare I use the word brand?!) that demonstrates they have positive core values will perpetuate the whole reason their business exists.

Another way to say it is…when companies run a respectful business, treat their employees and customers right and support the community that supports them…they build loyalty.  And loyalty translates into more money, allowing the company to continue to run a respectful business, etc. etc.

Making money is nothing to be ashamed of.  In fact, it’s the thing that allows you to give back.

Image courtesy of @boetter

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{ 13 comments }

Bryon Abramowitz February 24, 2011 at 7:27 am

I’ve learned over the years that there are only two types of for-profit organizations. There are those that are in business to make money and those that make money to stay in business. Most organizations that fall into the later grouping tend to be social-driven organizations where profits go not to executives or shareholders but rather to some cause.

The difference between both types of organizations is substantial.
Bryon Abramowitz recently posted..Repeating History

Tracy Tran February 24, 2011 at 9:42 am

I agree in part that businesses need to make money, but I love Jason Kottke’s answer of what are the goals of business and why we’re in business.

http://kottke.org/11/01/the-goal-of-business.

Profit is great, but kicking butt is much more awesome.
Tracy Tran recently posted..If I Were Running A Company…What My Company Should Strive For

Sharlyn Lauby February 24, 2011 at 4:52 pm

@Byron – Thanks for the comment. I really like the way you stated this. Many years ago, I wrote a white paper on corporate social responsibility and I believe businesses are starting to really focus on how to be a good corporate citizen (not just a good business.)

@Tracy – Thanks for sharing the article and the comment. I love the “goal is to kick ass.” I’ve always told people my goal as a business owner was to fund my volunteer career. But the key word is “fund”. I have a great clients and work on terrific, interesting projects. And, they are supportive of my volunteerism. But I have a paid service to deliver and that comes first.

Robert Dempsey February 24, 2011 at 10:00 pm

Short and sweet Sharlyn, great points. In business school we were taught all about the bottom line and how to achieve it, however there was stress on working well with employees and being an ethical entity in our communities. But at the end of the day, as you said you need money to survive, and you can’t forget that. Just don’t be shady in your attempts to achieve it.
Robert Dempsey recently posted..How I Got Google Ranking With Zero Content

Young February 25, 2011 at 6:59 am

I like the quote “You can’t help the poor if you’re one of them”, though I don’t totally agree, since sometime only the poor will help the poor.
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Sharlyn Lauby February 25, 2011 at 2:59 pm

@Robert – Thanks for the comment. Very well said. I’ve worked for some terrific companies in my career. We had lots of fun and everyone was great. But when we needed to get a project done or hit a revenue target…we all got very focused, and quick.

@Young – Any business needs a certain amount of money just to survive. If the goals of the business include corporate social responsibility, that has to be figured into the equation. Thanks for the comment.

Carolyn Stoll-Sokol February 28, 2011 at 11:51 am

Reminds me of a similar saying that applies to life as well; “We make a living by what we get, we make a life by what we give.”

Sharlyn Lauby February 28, 2011 at 3:32 pm

Love that Winston Churchill quote! Thanks for sharing Carolyn.

Carolyn Sokol February 28, 2011 at 5:48 pm

Thank you Sharlyn, it was driving me nuts that I couldn’t remember where that quote came from!

Alicia Arenas (@AliciaSanera) March 1, 2011 at 11:18 am

Sharlyn, I almost jumped out and shouted after reading your post. Preach it!

I am very fortunate to work with clients who are kind and generous. In my observations, it is usually the kind and generous entrepreneurs who are most uncomfortable having “making money” as their purpose. If entrepreneurs would get past that roadblock, achieve financial success and give back, they would find so much fulfillment – and the world we be even better.

Thanks for the great post Sharlyn!
Alicia Arenas (@AliciaSanera) recently posted..The You Don’t So I Won’t Sales Technique

Sharlyn Lauby March 1, 2011 at 3:11 pm

Totally agree with you – making money isn’t evil. Thanks for the comment Alicia.

Heather Townsend March 1, 2011 at 3:34 pm

Good points well made in this article Sharlyn – however, I think you have highlighted potentially one of the problems with the HR profession (I being a representative of that profession), is that we lose sight of the fact that a business exists to make money, rather than to provide a meaningful existence for the employees.

Sharlyn Lauby March 1, 2011 at 5:02 pm

Thanks for the comment Heather. We both realize that’s what makes for a great HR Pro – being able to balance the profitability of the business with the needs of the employees. Not easy…but that’s what we do.

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