As you may know, over this past weekend I visited the Arizona State University campus and in particular the W.P. Carey School of Business. This post isn’t going to serve as a recap of the weekend, but it was during this time that a single concept was driven home to me. The Dean of the MBA program was giving a quick overview of the core curriculum and what stuck out to me was when he mentioned what the purpose of a business is and how it is measured.

The Purpose of a Business

In short, it can be said that the purpose of any business is to provide value. Value to the customers, employees, shareholders, and even the community in which it does business. A successful business purchases materials or labor and turns them into a product or service that is valued higher than the original expenses. How one goes about doing this and the specifics of any business is another matter, but I believe it’s an important concept to realize that you’re in it to provide value.

I see so many people that are “in business”, and their primary goal is to make money. Interestingly enough, customers aren’t just going to buy something so the owners can make money (exceptions include kids fundraisers and lemonade stands). Whether we own and run our own business, or sell our services to a business as an employee, we need to remember that the most important thing is to provide value to the other party. If you can do this, the money will be sure to follow.

The Measure of a Business

Now that we’ve talked about the purpose of business being to provide value, it can then be said that the measure of a business is how much value it provides, and this is measured in dollars. It’s no secret that people are in business to make a profit, but this profit is only a measure of the increased value that a business is able to provide in excess of it’s original costs.

This goes hand in hand with the purpose of a business because it again drives home the point that money is secondary to value. It’s an interesting concept to think about in conjunction with any business. For those of you who run blogs and attempt to “make money” from them, ask yourselves what value your providing. Why should someone visit your site over another, what’s the added value? This is a question I ask myself all the time, and it can often be tough to answer. So in whatever you do, ask yourself what value you’re providing and how you can increase it in the future.

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