What Is a Business Purpose Statement?

What is a business purpose statement? The simple answer is that it usually is a one or two-liner statement that states the reason why the company is formed. This statement is usually written in general terms but can also be industry-specific as well. It is not to be confused with a mission/vision statement, since a mission statement is what develops the brand and identity of the business while a vision statement emphasizes the future of the business and motivates the employees in achieving their goals.

The more detailed definition would be that a business purpose statement is a business document that contains the formal declaration of a company’s goals in one or two sentences. It explains why a company exists and what products or services it provides. A business statement of purpose is comprehensive and includes information about how the company meets the demands of its customers. Also, it focuses on the behavior of the company instead of what they think.

Components That Make an Effective Purpose Statement

Having a clear and identifiable business purpose statement is very critical for any business nowadays especially if they’re looking to add more people to their roster to help them grow as a brand and outperform their competitors. With that being said, here are some key components that make the purpose statement of a company very effective:

Inspiring. This is the first component that makes a business purpose statement really effective. The statement that is created should be inspiring to everyone who is working in the company. Also, it should be memorable and aspirational to all so that they can keep the company running in high spirits all the time. An example of this type of aspect can be found in Apple’s business purpose statement, which reads: “At Apple, we create tools for the mind that advance humankind.”Concise. An effective business purpose statement should be as brief and concise as possible in order to enhance its chances of getting retained in the minds of everyone in the company. An example of this type of aspect can be seen in Red Bull’s business purpose statement, which reads “To give wings to people and ideas”. The people part in the slogan refers to their core customers which are the sports enthusiasts, while the ideas part in the slogan also allows the company to explore different ventures such as music business and social business.A clear role and outcome. Many outstanding mission statements include a function for the brand as well as a desired result in the world. In addition to that, a solid purpose statement can empathize on various levels: commercial, sentimental, social, and even political in some cases. An example of this aspect can be found in the slogan of Barbie, which reads “To inspire the limitless potential in every girl”. The “role” part of this statement is inspiring the limitless potential of every girl around the world. Nowadays, Barbie’s role as an inspiration is now combined with a goal to promote positive role models for all girls in the world, irrespective of their appearance.Tension. A fascinating purpose statement may sometimes be grappling with two opposing intents that offer room for continual innovation and progress. One such example is IKEA’s company purpose statement, which states: “To create a better everyday life for many people.” This conflict is infused in IKEA’s objective to produce long-lasting, environmentally friendly furniture and homewares at the lowest feasible cost. As a result, this drives innovation, which leads to IKEA’s fantastic work and its status as a well-established company in the twenty-first century.Balance between aspiration and precision. A good mission statement should be ambitious but not ambiguous. It must be exact but not suffocating, providing for the opportunity for a firm to expand. “To aid in making this world a better place” is a vague goal statement. It’s grandiose but useless, and nothing but a meaningless cliche that benefits no one. LEGO’s corporate statement, which reads: “To inspire and nurture the builders of tomorrow,” is an example of a business purpose statement that strikes the balance between aspiration and precision. This statement anchors the company in always aiming to let youngsters experience the transforming power of play.Can be general or social. Some businesses have a broad purpose, which means that their business purpose statement does not have to have a social or environmental effect. These types of companies can always address social/environmental concerns, but it will not be a primary focus of their company purpose statement. Meanwhile, some businesses are social purpose businesses, which means that they were founded or founded with the intention of addressing a socio-environmental matter. And, in order for this type of company to have an effective business purpose statement, it should explain and state its willingness to solve the aforementioned social or environmental issue.It evolves as time goes on. An excellent business purpose statement does not have to be one-dimensional. It may keep evolving as the company grows or as the situation around it changes, necessitating a re-frame of what it stands for. The presence of this type of attribute in a business purpose statement indicates that companies are ready to alter their competitive context in order to address more recent or urgent issues that have arisen.

Different Types of Businesses

There are different types of businesses that exist, and each entrepreneur who may just be starting up should properly choose the business structure that fits best with their enterprise. Without further ado, here are the types of businesses listed below with their definitions:

Sole Proprietorship. A sole proprietorship is defined as an unincorporated business that is owned only by one person. Despite it being the simplest of the company types, it also provides the least level of financial and legal security to the owner. This is because sole proprietorships, unlike partnerships or corporations, do not set up an independent legal identity for the business. Essentially speaking, the business owner has the same image as the corporation in this type of business. As a result, the owner bears full responsibility for any and all liabilities incurred by the company. If the entrepreneurs wish to keep complete control of the firm, this is the best solution to choose.Partnership. A business partnership refers to a type of business that is owned by two or more persons known as partners. Partnerships, like sole proprietorships, can benefit from flow-through taxation. This essentially means that the income is taxed just once because it is considered as the income of the owners. Partnership owners are personally responsible for the firm’s liabilities. General partnerships are the simplest type of partnership to join for novice entrepreneurs since they have little upkeep fees. Partnerships, in general, provide more flexibility than other forms of enterprises, but they also expose owners to more risk.Corporation. This type of business refers to legal entities formed by shareholders. Incorporating a business shields owners from personal liability for the company’s debts or legal conflicts. This type of business is generally more difficult to establish than other types of businesses since various paperwork has to be prepared, such as articles of incorporation, the name and location of the business, and the purpose of the business. Corporations, unlike sole proprietorships and partnerships, exist as legally independent entities and will continue to survive even if the owner of the business dies.Limited Liability Company. This type of business can be known as one of the most adaptable business structures. Limited Liability Companies are hybrids that incorporate elements of both partnerships and corporations. They keep the tax advantages of sole proprietorships as well as the limited liability of corporations. This type of company also has the option of choosing between several tax treatments. Furthermore, because limited liability companies operate as their own legal entity, they benefit from limited liability status. This shields the business owners from personal liability for the company’s activities and obligation

Steps in Creating a Business Purpose Statement

Creating a business purpose statement portrays what the business intends to portray. With that being said, listed below are the essential steps in creating an effective business purpose statement:

  • 1. Perform Research

    The first thing to do when creating a business purpose statement is to perform thorough research on the relevant markets. You must do market research to understand current market demands in order to tailor your company statement to the appropriate audience. In performing your research, consider how your company addresses current problems or delivers products or services that meet the needs of customers. Finding out what your rivals are doing and seeing whether there are any problems that have not yet been solved by a product or service are two ways to investigate the present market.

  • 2. Understand the Needs of Your Customers

    After performing the necessary research in the present market, this step will then follow. Knowing your clients and their demands is vital for writing a solid business purpose statement because it clarifies your relationship with them and what you provide for them. The company statement of purpose is all about serving and meeting the demands of your consumers. One of the easiest approaches to find out what your customers want is to by conducting surveys or polls to allow the opportunity to investigate your whole client base based on the results of the said survey or poll.

  • 3. Establish Your Goals

    After identifying and understanding what the customer really needs, this step will then follow. Keep in mind that you need to use clear and precise short-term and long-term goals to direct you when generating your business purpose statement. Measuring achievements, such as mentioning specific quantities and due dates, is an excellent method to establish your short-term and long-term goals. It should also be noted that a good short-term or long-term aim addresses the direction of your company, its employees, and its consumers. The design of your business mission statement is directly inspired by your short-term and long-term goals.

  • 4. Identify the Mission and Vision

    After establishing the goals of your company to be written in the business purpose statement, this step will follow. In this step, what you need to do is to establish your company’s values and mission to better comprehend its purpose. Since vision and mission statements are statements that focus on your company’s guiding principles and general view for the future, you need to consider these statements to help you scale back your business purpose statement to something more feasible and practical. You may also discuss with other members to determine your company’s ideals. The gist of this step is to consider why you started your business and what you aim to achieve.

  • 5. Gather Feedback

    This step is extremely helpful to creating the business purpose statement since it adds a new viewpoint and identifies opportunities to improve your messaging. When you enable workers and customers to express their true sentiments, they will give valuable feedback. A customer provides a unique perspective since they are better aware of why a consumer chooses your items and/or services and also what they value. Additionally, customer feedback can also be used as a testimonial or review.

  • 6. Write the Statement

    After gathering feedback from customers, this will serve as the last step in creating a business purpose statement. This step may be the last one but it is still essential because even if the company objective statement is only a phrase or two long, it must be well-formatted. Proper formatting entails ensuring that your business purpose statement’s structure is easily readable. Also, check that your message is consistent across all platforms and that there are no disparities among your statement on your website and in papers.


What does a business purpose statement do?

A business purpose statement establishes expectations for the company’s leadership and staff, as well as its consumers and investors. It serves as your company’s future blueprint, guiding all the decisions that are being made, from how you produce your goods to the language you use in your marketing. Furthermore, the business purpose statement impacts your consumer.

Can a business purpose statement help achieve company goals?

Yes. Once there is a clear business purpose statement that drives the company, a company is better equipped to fulfill its goals. All workers, from new recruits to executives, understand the company’s direction and the importance of their contributions. When everyone is working toward the same objective, it is possible to have a properly running business with goals at the forefront.

How does a business purpose statement help in employee loyalty?

Employees love working for a firm that treats them as though they are important members of the team. Communicating a strong business purpose statement boosts this experience since employees feel like they are part of a team that works toward the shared objective of the organization. A business purpose statement, like a value statement, allows workers to function within the underlying ideals that comprise the business while still feeling proud of the work they’re performing.

As stated earlier, creating an effective business purpose statement helps convey the message of the business in one or two sentences. Additionally, when this statement is shared everywhere, such as on social media, more and more people will know about your business. Also, having this type of statement helps the clients know the reason why you are providing certain products or services. In this article, different examples of such statements exist to aid you in creating one for your own company.