Why are you in business?
When a business gets started the owners primary purpose is to create a successful firm that can generate profits and ultimately become financially successful. This is what most entrepreneur or owners have in mind when they plan to start a company or firm. We may express this in better ways by asking what is the goal of the firm. We can arrive at a more general answer by saying that the firms goal is to create value for the owners. In publicly traded companies the owners are the shareholders. Another way of expressing this is that the goal of the firm is to maximize shareholder value. Shareholders are owners of publicly traded companies through owning stocks. All the activities within the firm should be aimed at adding value. It is only by maintaining and adding value that there will be sustainability.
With the resources and funding available to the business owners and managers it takes real leadership and focus to understand the financial and operational business elements and seize opportunities to generate real value. When real value can be seen in the business it is much easier to attract investors and convince the banks to provide loans. The business owner has to be clear at all times on the value proposition being offered. Businesses have to consistently guard against managers making decision that reduces the value of a company. This is why it is important for the business to educate its managers and owners in the financial aspect of the business. In managing a business, it is important to know that profits are good, however positive cash flow is a key element of keeping the business operating. With the availability of cash flow it is then easy to use the time value of money to generate more cash. An astute business manager is always balancing the risk versus the rewards of an investment. Again, the objective is to create value for your business.
Business Owners, Share your view on why are you in business.