The goal of a business is to make money for its shareholders.  This is the bottom line.

Many people join the entrepreneurial fray purely out of circumstance, to try and make a living.  Be that as it may, as soon as business starts, one quickly learns that things are not as they seem –  the path to making money is quite often counter intuitive.

If the purpose of a business is indeed to make money for its shareholders, why don’t we buy up a lot of printers and ink to print a few thousand bank notes?  Well, money wouldn’t be worth anything  if everybody had it.  So then, why don’t we just take money from people.  This is not very sustainable because people would want to do the same thing to you, thus wealth would be owned by the strongest man as was the case in ancient times.  It seems pursuing this goal of business literally can lead to atrocious outcomes.  Hence I propose that this paradigm broken.

Enriching the shareholders is only a measure of the success of a business; it should not be considered the ultimate goal.

I would argue that the purpose of a business is to trade.  Trading implies a voluntary exchange of value between two parties.  Hence the daily mission of a business must be to find better ways of adding value to its customers.  If we say the purpose of a business is to trade, it means after this transaction, the business must be in a position to trade again.  This implies that each transaction must yield sufficient returns to ensure a continuum of trade.

I mean to say a business that breaks even (also considering other economic factors like inflation) is a successful one if it is continuously trading because this implies that it is continuously adding value to its customers.

What about profit?

I think profit is just a consequence of trading well.  It is a measure of a company’s capacity to continue trading – which is a good thing but not the thing.

Vusi Sindane