Early in creating a company, a vision, a formal mission statement, and company values are formed. On the other hand, the business purpose is more elusive. The majority of new businesses have the primary goal of making enough money to survive. Entrepreneurs may strongly identify with the reason they founded their company, but the rest of the organization may not always share this drive. But when a business grows, it can naturally begin to identify a purpose that directs its tactical decisions.
Understanding business purpose
If the organization’s direction is not made clear in a clear business purpose statement, it will veer off track. A complete grasp of what the company is doing right now, what it intends to do next, and where it aspires to go in the future is necessary for a meaningful purpose. The business purpose, however, tries to primarily address why the business performs what it does, unlike a standard purpose statement. While outlining the general course of the company, it may also include particular elements like core emphasis areas, strategic alliances, and target audiences.
Why business purpose needs to be effective
Outlining the business purpose aids in directing the business in the future. The business purpose establishes expectations for top leadership, staff, and external parties. Although business purpose statements are primarily utilized internally, they can also help with the creation of necessary external papers. A business purpose should change as needed to reflect the demands of the business and the shifting nature of the market. What does having a stated and publicized purpose mean, you might wonder. Aren’t there a tonne of terms that describe the direction of your organization already? What advantages does it actually provide? Here are five benefits that businesses with a strong sense of purpose could take advantage of.
1. A Clearer Strategy
Today, many businesses in a given sector offer goods or services that are very similar to one another. And when they consider how to differentiate themselves from the competition, they frequently settle on the same strategies: low prices or superior marketing strategies that promote consumption. These levers can be challenging to utilize at times in a stressful economic environment, which is the issue. However, businesses can also use their purpose as a strategy. In a sense, redefining an organization’s activities for a certain goal involves the redefinition of its market niche. A product or service stands out when it serves a function beyond its original intent, such as reducing negative environmental effects or enhancing favorable socioeconomic effects.
2. A Positive Reputation
Numerous studies support the idea that a business that focuses on making a positive social impact is more well-liked by the general public. 80% of citizens, according to the Edelman Barometer, think businesses ought to take action to address issues of public interest. In addition, a survey by New Paradigm Strategy Group found that 72% of respondents agreed that a company should have and govern itself with a purpose of general interest. According to the most recent Deloitte analysis on retail industry trends, consumers are increasingly using the concept of purpose as a key consideration when making purchases.
3. Increased Customer Loyalty
As a result, it makes sense that companies run with a purpose that extends beyond profit and financial gain will have greater customer loyalty. In a recent Sustainable Brands research, it was found that 80% of customers think they are more loyal to a brand if it helps them live what may be considered a better life—one that includes balance, simplicity, meaningful connections, personal growth, etc. In other words, a business that makes an effort to positively impact society enjoys greater consumer loyalty. The most recent Cone / Porter Novelli survey indicates that nearly 8 out of 10 consumers are willing to suggest a product if it is made by a company that has a positive influence.
4. Increased Innovation Capacity
A Deloitte Insights study found that employees may view organizations with a defined purpose as being more inventive. Additionally, they would frequently leave more room for the development of fresh commercial prospects and development paradigms. Business leaders from organizations with a strong focus on their reason for discovering that their business is more proactive than others and is better suited to initiate successful innovations or organizational transformations, according to a study by EY and HBR that supports this. It appears that betting on business purpose are receptive to new areas of innovation and reflection when they adopt new objectives in terms of having a positive impact on society or the environment.
5. Economic and Financial Growth
Finally, all of this naturally results in improved economic and financial performance. We already knew that CSR spending helped businesses perform better. But defining your goal more precisely can also help you make more money. A Kantar survey found that during the previous 12 years, brands that are considered as having a significant beneficial impact on society have had their brand value rise by over 180%. Over the same time span, the value of the enterprises with an average social impact would have only climbed by 86%. In conclusion, having a distinct higher purpose can help an organization build a stronger reputation, increase customer loyalty, and spur more innovation and economic success.
How Gerbes Consultancy can help you in finding your business purpose?
Every organization has different needs and goals, and different motivations and considerations that spurred them to contact a consulting firm in the first place. A reputable, trustworthy firm should be able to provide a wide range of business advisory services, so they can tailor each client’s service package to their unique situation and budget.
At Gerbes Consultancy, we do exactly that. Gerbes Consultancy can help you overcome challenges, find a purpose, and increase the revenue and growth of your company.