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Jul 21 2004
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[tsg] Question 1 – What’s the purpose of a business?

Tom Ehrenfeld’s answer

John Jantsch – I would like to think, I’ve always tried to think, that the
purpose of a business is to give the owner of that business and the folks
that work at that business more life, more freedom…boy am I naive.

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  • John Jantsch

    I guess I was being cynical or sarcastic or whatever it is that happens to business owners who have been in business over 10 years! Amen to the points you make. I’m just a hopeless romantic.

  • http://www.startupgarden.com Tom Ehrenfeld

    Well, in theory I do agree with you John. But many individuals who launch their own businesses find themselves to be a slave to their company. With far more at stake and a greater blurring of lines between work and personal life, these individuals often feel trapped by the demands of their baby, their venture. Moreover, most businesses don’t, at least initially, provide more income to the founder either.

    Longterm, once you have developed to discipline to set real boundaries and positioned the company to pay yourself a fair wage, you may enjoy more freedom. But the road to get there is rockier and more time-consuming that most would imagine!

  • John Jantsch

    I spent a whole lot of time working with Michael Gerber and he really helped form my idea of what a business is. I don’t know that he has any particular claim to being more articulate about it, I just happened upon some of his writing at a time when I needed some direction.

    The answer seems to be somewhere between the numbers and the ether of small business. Balance is what causes sanity.

  • http://darrin365.typepad.com Darrin Dickey

    I’m also a fan of the E-Myth, but I think the purpose of a business is to earn money for the owners by creating products or services they are passionate about. (Money is never enough by itself, but a business will fail without money and customers both.)
    However, I think smart owners create products that are in demand by customers and always have an eye toward making sure employees are challenged and rewarded.

  • http://NOONSHINE.COM WILLIAM NOON

    HEY, THIS IS A GREAT QUESTION! IF WERE IN BUSINEES FOR OURSELFS WE SHOULD KNOW THIS ANSWER BY HEART. I FELT THAT I HAD AN IDEA THAT WOULD GIVE THE CUSTOMER A BETTER PRODUCT AND SERVICE. I ALSO WANTED TO DUPLICATE MYSELF AND SELL FRANCHISES SO OTHERS COULD HAVE THEIR OWN BUSINESS’S. MY GOALS ARE STILL THE SAME 11 YEARS LATER.

  • http://www.ri-gas.com Larry Runyan

    I’m a big “E-Myth revisited” fan … the purpose of a business is to build it and sell it for a gain (hopefully).

    I also like to thought that business is for the employees to make a living wage plus hopefully more (that’s job 1) THEN the business satisfies customer demand in whatever marketable product or service that it renders (that’s job #2).

  • http://www.startupgarden.com Tom Ehrenfeld

    I don’t completely agree with the last comment–I think that a distinction must be made. All businesses should always be managed with an eye toward valuation–that is, managers/owners should know what the business is worth and how they can increase its value, for such actions are almost necessarily ones that improve the business (unless one is operating in a cloud-cookooland bubble). But there’s no reason one *should* sell the business unless its really in your best interest. You start the business to do the business, not to sell it. You track its value as a key metric of its health. And you sell it if and only if that’s part of the plan.

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