Do you know exactly where your business will be in five years? Can you tell me its size? Its status? It’s production numbers and it’s profitability? Do you know what kind of good or evil it will be doing? And if you think you know, how can you be sure? There are days when I feel like I can clearly see how ETR will grow and what kind of shape and size it will have when fully grown.
Then there are other days when I’m not entirely sure what we should be doing. I don’t know if there’s anything I can do when my vision for ETR flickers and distorts – but I do know that when it’s 100% clear, I’m a much stronger leader. I can give clearer directions, set more sensible goals, make better judgments, and do a much better job of motivating the troops. What about you? Is your vision for your business clear or blurry? If it’s blurry, what I’m going to say today may help clear it up.
Imagine that your ship is steaming off toward the horizon. You are busy making sure the furnaces are stoked, the engines are running, and the machinery is oiled. The crew is busy doing what they are accustomed to do, but nobody knows exactly where the ship is heading – except for you. But do you? If you don’t have a clear idea of the purpose of your business – its main purpose – you really don’t know.
Are you in business to: Make a profit for your shareholders? Provide something of value to the marketplace? Enrich yourself personally? Provide income and benefits to your employees? These are all very common business purposes. And there are plenty more. For example, you could be in business to: Dominate your industry. Further your career. Prove that you were right about something. I can honestly say that making money personally – for my own bank account – was never a motivation for me. The reason I started most of my businesses was because I wanted to prove a point.
Usually, it went like this: I’d come up with what I thought was a brilliant idea. The powers-that-were reacted coolly to it. I pressed it for a while, but they kept resisting. Finally, disgusted, I decided to do it myself. “I’ll show them!” I thought. There were a few exceptions. Several times in my career, I’ve been asked to turn around a troubled business. To do that quickly and effectively, I usually created a product and a marketing campaign that had a primary purpose of simply bringing in the cash.
In looking back on those experiences, it’s clear to me that the better businesses were started because I wanted to prove a point, not because I wanted to create some cash flow. I’m not saying that making a profit is bad. Far from it. Being profitable is the only way your business can effectively carry out its primary mission. And, in my opinion, that primary mission should be to do – and be – good. If your business isn’t profitable, you can’t continue to improve the product, you can’t effectively respond to customer service requests, you can’t reward your great employees with great compensation packages, and you can’t add value to your community by hiring more employees and using more local services.
In concept at least, a good business is good for everyone: the shareholders, whose investments appreciate at a good rate the officers, whose personal incomes and experience are enhanced the employees, whose income and benefits reflect the value of the business the community, whose citizens have more jobs and the customers, who benefit from a fair sales transaction in a free-market environment What I’m getting around to is this: The best kind of business does not have profit as its primary purpose. It is fundamentally motivated by something else – some idea about how its product/service and/or its pricing and customer service is better/more attractive than that of the competition.
This idea – this “how-we-are-better” idea – should be the beacon that guides the ship of your business through the seas. It will help you decide how to present and package your products, and know what kind of language and graphics are appropriate for your marketing campaigns. It will also make it easier to select employees, to guide them, and to dismiss them if they want to follow a different beacon. But, as I said, profits are important too. Very important. If your “how-we-are-better” idea is the beacon that guides your ship, your company’s P&L is the gauge that tells you if the engine is in red alert or the turbines are filling up with water.
If you see your business in this way, you will gradually become less interested in profits per se. You’ll take a glance at the gauge from time to time to make sure your ship isn’t splitting apart, but what will hold your interest and inspire your crew will be that beacon – your idea about how you can be even better. I think it’s foolish to care about market share. I think it’s stupid to want to be No. 1. I think it’s wasteful to push all your best people to squeeze out an extra percentage of profit if you are losing sight of the primary course you’ve set.
One more thing. Always keep in mind that your business – as a business – is based on a very fundamental relationship between you and your customers. That relationship is the foundation of your “how-we-are-better” idea. All other considerations – profits, dividends, employee bonuses, and even your own financial compensation – should be secondary. And here’s the icing on the cake. If you do make those other considerations secondary, your chances of achieving them in abundance will be greater. Because the business will last longer.
[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]