Not profits

on .

MoneyI got a deceptively simple question for you to answer: What's the purpose of business? Mail me your take or read on for mine.

Most MBA graduates will tell you that the purpose of business is to maximize shareholder value. Really? It would seem to me that only in an Orwellian world would all shareholders in a large public company share the same or similar objectives of holding that company's stock to enable management to cater to them. Others may say that the purpose of business is to maximize profits. However, many entrepreneurs and professionals are not motivated primarily by the prospect of great riches when starting or running businesses. The purpose of business is far simpler than that: to provide demanded goods and services. Profits are then simply a measure of how successful a business is in achieving that singular purpose. Profits are like the goal count of a striker in football, determining whether he can keep playing or should make way for a better goal scorer. The lack of profits induces extinction, the removal of unwanted goods and services and their suppliers. Everybody benefits when companies make sustained losses as, as a consequence, limited resources are re-channeled to those who better supply demanded goods and services.