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I thought I would write a little treatise on my own thoughts and experience of business and some of the observations I've made of others, and share it with you here.

Personally I think that the idea that businesses exist solely to maximise returns for shareholders is possibly one of the worst motivations that I can think of for setting up and running a business. Businesses exist to serve, provide or otherwise enrich society in some way shape or form. They do not exist solely to generate a return for those funding the business!

There is nothing wrong with the profit motive, but to hold it as the sole reason for a business's existence is close to prostitution and whoredom! Profit is generated as a result of what you do - serving the customer, providing a service, or otherwise providing a benefit to someone, somewhere that they did not have before.

If it were up to me, shareholders are the last in the line behind the customer, partners & suppliers, staff, management and finally the shareholder whose reward is the return on capital from which they have provided.

To sum it up, businesses exist to serve, period! Even if it is just the shareholder in certain circumstances, someone, somewhere should benefit from the business's existence!

I came up with a list of ideas that I thought sum up why some businesses succeed while others do not, and will list them here.

Start Small, Think Big!

I think there is alot to be said for starting off from a small capital base and then working your way up from there. Partly because your success will be driven by your customers, and therefore the risk you take at the outset is greatly reduced, and your subsequent business will be built upon a solid foundation of customer happiness and satisfaction!

I guess there are some exceptions when it comes to a known and existing, yet untapped or unserved market just waiting for someone to come in and set up. In those circumstances where you know there is an existing but untapped market, your business success is more likely assured and it could warrant throwing larger amounts of capital at the business from the outset. Again, every business is different and different circumstances call for different approaches.

Let the customer drive your growth!

Follow your Interests:

Many businesses have been formed out of someone's background, experience or interest in a certain line of work. While not always necessary or even the case, it helps if you have a passion or interest in the business you want to get into, because if you enjoy what you're doing, it no longer becomes work, but a joy!

Find a Growing Market:

Many of the most successful businesses have been at the forefront of a growing market. In some cases they have even created that market. Think Apple. It helps if you position yourself in a growing market to take advantage of an incoming tide. If you are in a dwindling or declining market, your task of making the business succeed is that much greater!

Of course there are niche markets where you can carve out success by building a better mousetrap where the market is already established but not necessarily one of the fastest growing.

Find a Gap in the Market:

In order for your business, product or service to do well, you need to find something which people either want, need or desire to have. To me this is the most fundamental key to business success. You have to find a gap in the market that is not being served by somebody else, or not being served well. Without it, you're not in business! If people don't want, need or desire the product or service you have, you don't have a business!

Find a way to serve the customer and you're in business! Most importantly is to find a problem that you can solve. What problem are you solving for your customer/client? This is your competitive advantage and ultimately what will drive your business success. What gap in the market are you filling, solving or providing for your customer. Ultimately that will be why you succeed in the long term, which leads me on to my final point.

It's not about the Money!

So many people get this wrong when they start out in business instead of thinking about 'how can I help?' or 'what can I provide' or 'do better' than the existing providers. If you get this right, you will have found your business niche and the reason for your existence which will probably outlast any profit seeking motive that others might have.

To me this is at the root cause of the problem with so many corporations these days - their only and sole guiding focus is their bottom line - forced upon them by the incorrect philosophy that businesses exist solely to provide a return for their shareholders. What a load of ......!
Money isn't the reason for a business's existence, it is the result of a business's existence!

The only exception to this rule is if you are an investment company, where your sole purpose is to maximise your profits for your investors/shareholders. You are serving your customers and clients by providing them with the best possible return on their investment. It is when this idea of maximising profits for shareholders is applied to a company that otherwise exists to serve its customers, at the expense of customer satisfaction, that problems arise. It is then that the original reason for founding the business in the first place is lost.

(Edit: 31/8/15:)

Luck and Timing

One thing that I haven't touched upon and which is an equally important part of a business's success is luck and timing.

Both are equally important in terms of long-term success, but perhaps more important in the early stages of a business. If your timing's not right, then you may struggle to succeed in the meantime while you wait for the timing to be right, or you may fail completely in your business!

Likewise, and I think many entrepreneurs would agree with me, having a bit of 'luck' along the way is almost imperative to a business's success! Some might say that you create your own luck, and to a degree this is probably true because without putting yourself out there in a position to take advantage of any luck, it's unlikely to come and meet you where you are! As the old Chinese proverb goes, 'Man stand for long time with mouth open, waiting for roast duck to fly in!'

(End of edit)

To me it's also why so many large corporations make dumb decisions because they are driven by maximising profit, not serving their customers. If they think about why they exist, what their role is, and who they serve - ultimately their customers or clients - and not their bottom line, they are more likely to achieve customer satisfaction and longer term business success than they would otherwise. If they lose sight of this, or haven't even learned it at all, then they are doomed to repeat the mistakes of previous businesses that have made similar 'dumb decisions'!

As Jesus himself said, "But he that is greatest among you shall be your servant." - Matthew 23:11

By Steve Moxham
July 1, 2013

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