The purpose of a mission statement and why your business needs one

Whether your business is a corporation employing thousands or a startup operated out of your garage, you need a mission statement. Often times, the only difference between a profitable business and a failed one is the attention paid to understanding the purpose of the business itself: the mission.

A properly crafted mission statement increases efficiency, productivity, and profitability. When carefully prepared, this statement serves as the organization’s constitution; describes both the vision and the boundaries of the business. All strategic and marketing plans are built on the foundation provided by the mission statement.

Bottom line performance improves when you strictly adhere to the limits set forth in your statement. You’ll make fewer forays out of the way, spend less time considering “whether” you should add a new line or expand one you already have, and better allocate your scarce resources; time, capital, energy and people.

Mission statements will include all or most of the following information: what you do, where you do it, who you do it for, how you do it, and why you do it.

Here’s a quick, limited illustration of how a mission statement takes all the ideas and input available in the marketplace, on the Web, or in your imagination, and channels them into a way that allows you to make the best decisions for your business. Take this simple concept and expand it to cover the six points listed in the last paragraph.

Compare the performance and profitability of a pencil manufacturer with a narrow mission statement and one with a more elaborate version. Both production companies have an assembly line that fills a box with crayons before bulk packing it for shipment.

The first manufacturer tells his staff to pack each box with sixteen top-quality crayons for eventual delivery to the public. There are 60 different colors made by the company. As each employee picks up a box, he must decide which colors to put in the box and in what order to pack them. All 60 colors are beautiful and potentially desirable to the consumer, but the assembly line slows down as each decision is made, and customers don’t always know what they’ll get when they open the box.

The second company also manufactures 60 colors. Their production line understands what it’s like to pack sixteen high-quality crayons into each box, knowing the specific color and location of the colors within each box. The business offers several different color collections, each packaged on a rotating schedule. The packaging process is smooth, fast and trouble-free. Efficiency and consistency are the hallmarks of this operation.

Which organization will eventually own the crayon business?

If you are a decision maker, board member, business owner, or entrepreneur, don’t make the mistake of overlooking this primary requirement of planning for success. Take the time to translate your unique vision into a well-written mission statement.