Friday, April 27, 2012

Why Do Businesses Exist?


Why do businesses exist? In a recent discussion, I learned that many people think that the driving force behind business is the need to provide jobs for people, and that business owners don't work for anyone else. I don't blame people for having this misconception. It is easy to fall into these ideas in our culture.
How long would you be willing to work without being paid? How much would you be willing to risk to see to it that a complete stranger had a job? Don't get me wrong. People need jobs and need to make a living. What is at question here is what incentive is there for an individual to expose himself to the financial risk of starting a business in order to make sure he can feed his family? Providing jobs, fulfilling personal goals, and leaving behind a legacy are all things that business owners do, and are good things. But are they sufficient reasons to go into the competitive world of business?
If they are not, then what is? How about not having to work for someone else? Do you know anybody who has the luxury of owning a business without the hassle of working for someone else? Really? About the only person I can think of that fits this description is a subsistence farmer, and he had better be single! Every entrepreneur, every business owner works for someone. They work for their clients, why else would a client pay them? They work for their employees. If they didn't, the employees wouldn't have jobs for long. They work for the bank, or their loans would be foreclosed. While many business owners enjoy certain privileges and freedoms that most employees do not does not mean that they are free from accountability.
How many times does an employee see the owner come in to the office an hour after everyone else, take a two hour lunch, then leave in the middle of the afternoon and come to the conclusion that “It's good to be the King!”? What they didn't see is that the owner made three stops on the way in to visit suppliers and customers to maintain healthy relationships. They didn't see that the owner ate a drive through burger between an 11:30 meeting with the accountant, and a 12:15 meeting with the loan officer at the bank, then stopped at the post office to drop off his quarterly taxes, all of which took two hours and left no time to stop for lunch. They didn't see that the only time that he had to see his family today was to pick up the kids from school and drive them home, because he was planning on being in the office until 10:00 that night mapping out the next sales campaign. Everyone works for someone.
Being a business owner has a lot of benefits to be sure, and society benefits when businesses exist, but if the sole purpose of a business is not profit, the business will ultimately fail to produce any of those benefits. Profit is the engine that drives a business forward, causing more jobs to be formed and better wages and living conditions for those working in those jobs. If we follow this line of reasoning, it becomes clear that it is unethical for a business to be run for any purpose other than profit, because without profit, it can accrue none of the supposed benefits we expect from a business.  Without profit, a business becomes a self-imposed slavery.