- Writing a Business Plan
- Financial Statements
- Business Forecasting
- Business Checklist
THE MISSION STATEMENT:
A mission statement is what separates one business from all others within the same industry. It gives the company a unique identity. In generally, the mission statement answers who you are, what you do, and where you plan to be in the future.
Below identifies the two main components which are necessary in developing a mission statement.
1) Defining what business your organization is really in;
2) Defining your long-term objectives.
Let's look at each component separately.
1. - DEFINING WHAT BUSINESS YOUR ORGANIZATION IS REALLY IN:
At first, this may seem an easy task. For existing businesses and aspiring entrepreneurs, however, defining what business they are really in or plan to be in is one of the most painstaking chores they'll ever experience. A solid business definition generally consists of three areas.
A) What Consumer Need(s) Will You Satisfied?
A product or service will not be profitable if it does not satisfy a consumer need or a group of needs. What need is McDonald's restaurants satisfying? - They serve hot food, quickly and for a "good" value. Is there really a need for their product? Off course there is - McDonald's serves or "satisfies" over 20 million customers daily.
Many existing business owners can not pinpoint the need in which their products or services satisfy. This leads to many problem areas when communicating the merit of their product and their company to consumers. By identifying the consumer need (i.e. selling the sizzle rather than the steak), companies can better define themselves, thus enabling them to more efficiently reach the consumers who need satisfaction through their product or service.
The mission statement does not have to prove a need exists, rather it simply must indicate or imply that a need is present. To illustrate this, lets look at the mission statement for Otis Elevator.
Mission Statement for Otis Elevator
Our mission is to provide any customer a means of moving people and things up, down, and sideways or over short distances with higher reliability than any similar enterprise in the world. (Source: annual report)
What consumer need is Otis Elevator satisfying? The need is certainly implied in their mission statement and they do not attempt to prove the need exists. Moreover, people today "need" to be moved up, down, and sideways for whatever reason and Otis's mission is satisfy this need.
What consumer need will your company and the product you sell satisfy? Answering this question is the first step in creating your mission statement.
B) Who Will Your Customers Be?
The next step in developing the mission statement is to identify your customers? Who are your customers or who do you expect your customer will be? This may seem somewhat trivial and meaningless but many seasoned entrepreneurs find it difficult to define those who buy from them. Many state "my customers include anyone who buys my product". What these entrepreneurs do not understand is that by focussing on precise groups of customers, who have shared characteristics, new opportunities can be uncovered.
Many companies, however, tend to use a broad customer definition in their mission statement and a focussed definition in the customer profile section of their business plan. Whichever method you plan to use, it is imperative that you have a clear understanding and focus on who your customers are or will be. Below illustrates the mission statement for Deluxe Checks.
Mission Statement for Deluxe Checks
The mission of Deluxe Checks is to provide all banks, S&L's, and investment firms with error-free financial instruments delivered in a timely fashion. (Source: annual report)
As you can see, Deluxe Checks specifies three main customers - Banks, S&L's and financial institutions. By having such a clear focus, written down on paper, the company can design marketing campaigns for each major customer. As you can also see, the mission statement of Deluxe Checks implies a customer need. The need is simply "error-free financial instruments delivered in a timely fashion".
C) How Customer Needs Will Be Satisfied?
How you plan to satisfy your customer's need is the third item to be addressed in the mission statement. The mission statement presented below clearly outlines how the company intends to satisfy the consumer need.
Mission Statement for the Hewlett-Packard Company
Hewlett-Packard is a major designer and manufacturer of electronic products and systems for measurement and computation. Hewlett-Packard's basic business purpose is to provide the capabilities and services needed to help customers worldwide improve their personal and business effectiveness. (Source: annual report)
As you can see, Hewlett-Packard will satisfy their customers by improving their personal and business effectiveness. For many products and services, the actual offering tends to imply the method of satisfying a customer need.
2. DEFINING YOUR LONG-TERM OBJECTIVES:
The second major component to consider when developing a mission statement is your long-term objective(s). Some companies do not feel its necessary to provide a visionary view for their business, while others believe such long-term objectives provide direction to the organization. Most investors applaud the latter, since they want to have a sense of where the entrepreneur plans to take the organization. In addition, the investor can better gauge or speculate how profitable their investment may be in the long run. But most importantly, a visionary outlook provides the management team and all staff members with a mutual goal to strive toward.
Long-term goals in the mission statement are usually stated in terms of size, quality, market share, retained earnings, net income, reduction in costs or expenses, increases in sales, or rate of return, to name a few. Examples of a long-term objective may include "we will be the largest retailer of ....", "the company will strive to be the leading manufacturer of....", "we will reduce production costs by 20% within three years", "we strive to be the leader in customer satisfaction", and "the company will increase sales by 20% each year". Below depict examples of long-term objectives for several well known organizations.
As you might suspect, your business must set and achieve a series of short-term objectives in order to achieve long-term objectives. Moreover, short-term objectives are designed to lead to the achievement of long-term goals (you have to walk before you can run). Short-term objectives should be addressed in your business plan, however, they need not be mentioned in your mission statement. Instead, a separate heading should be established that lists your company's Short-term Objectives. Business plan writers using this approach generally develop a heading called Short-term Objectives and place it after their mission statement. Below illustrates various objectives of well known corporations (Lotus Development Corporation, Nike, and Citicorp).
Please note, these companies have not indicated whether the objectives are short-term or long-term. Also note; the following objectives may have since been altered to reflect the many changes in the consumer, social, technological, and other environments over the years.
Lotus Development Corporation's Objectives:
To build shareholder value through;
MISSION STATEMENT SUMMARY:
As illustrated above, the mission statement consists of two main components. The first component details what business your organization is in. Defining your business involves outlining your company's customers, the consumer need(s) that will be satisfied, and how your company will satisfy consumer needs. The second component of the mission statement involves establishing one or two major long-term goals. The purpose of developing such goals is two fold. First, it provides direction for the owners, management team and staff members ( i.e. all employees work toward a mutual goal). Secondly, establishing a futuristic vision shows an investor that his/her investment is working towards a much larger initiative.
One thing to remember when developing your mission statement relates to money. Never, never, never simply state that your mission is to make money. You and investors inherently know that money is the major purpose of the business venture. Instead, your mission statement should focus on important areas such as the business itself, the customers, the community, and the investor, just to name a few. Now lets look at other examples of mission statements.
Examples of Mission Statements:
The following examples are mission statements of actual companies/organizations. The first few examples are short in length and provide a broad business definition. The latter examples are somewhat longer and provide a more detailed business definition.
Please note: the following mission statements may have been altered by their companies to reflect the many changes in the consumer, social, technological, and other environments over the years.
Mission Statement of the American Red Cross
The mission of the Red Cross is to improve the quality of human life; to enhance self reliance and concern for others; and to help people avoid, prepare for and cope with emergencies. (Source: annual report)
The mission statement of the American Red Cross covers the components of a solid mission statement. It describes the nature of the organization as one that stands to help improve the quality of human life. The statement describes the organization's customers as those requiring emergency assistance. The customer need can be characterized as the emergencies that arise. The organization's long term goal is to continually enhance the self-reliance and concern for others.
Mission Statement of J&B Incorporated
J&B's mission is to develop inexpensive products which will provide North Americans with the opportunity to own and operate their own business.
The Company's long-term vision is to be recognized as a leading professional organization whose aim is to provide aspiring entrepreneurs and existing small business owners with the tools necessary to successfully compete in the ever changing global economy. In addition, the Company will develop a diverse product line that is fully integrated.
J&B Incorporated is another example of a solid mission statement. It identifies the customer as North Americans who want to own and operate their own business venture. The customer need is implied to a certain extent (I.E. individuals who are interested in owning their own business and who require business training). J&B's mission statements outlines its long term goals as: "being recognized as a leading professional organization and to develop a diverse & integrated product line".
The following provides additional examples of Mission Statements:
Mission Statement of Square D Company
Square D. Company is a $1.7 billion producer of electrical equipment and electron products. We are dedicated to growth for our customers, shareholders, and employees through quality, innovation and profitable reinvestment. Dedicated to growth, committed to quality. (Source: annual report)
Mission Statement of Sara Lee Corporation
Sara Lee Corporation's Mission is to be the leading brand-name food and consumer packaged goods company with major market share positions in key consumer markets worldwide.
We manufacture and market high quality, marketing sensitive products with growth potential. These products which are sold through common distribution channels include;
The Mission of Circle K:
We believe our primary business is not so much retail as it is service oriented. Certainly, our customers buy merchandise in our stores. But they can buy similar items elsewhere, and perhaps pay lower prices. But they're willing to buy from Circle K because we give them added value for their money. That added value is service and convenience.
As a service Company, our mission is to;
Satisfy our customers' immediate needs and wants by providing them with a wide variety of goods and services at multiple locations.
We will not place a limit on the conveniences we offer our customers.
They buy at Circle K much differently than at a supermarket. They come to our stores for specific purchases, which they make as quickly as possible. They want immediate service and are willing to pay a premium for it.
We will build our stores at locations most accessible to our customers.
We will organize our merchandise to (1) facilitate quick purchases and (2) encourage other purchases.
We will maintain our stores so they always be brightly lit, colorful, clean, and comfortable places for our customers and our employees.
Our Goods and Services:
We will not be one store - but a dozen stores in one. We are a gas station, a fast-food restaurant, a grocery store, drugstore, liquor store, newsstand, video rental shop, small bank - and more. (Source: 1987 Annual Report)
The Mission of Beatrice
We have a bold mission. It will challenge us. It will test us. Nothing is worthy of Beatrice. Nothing else will reward us more.
Over the next five years, Beatrice will emerge as the world's premium marketer of food and consumer products ..... the power in the consumer marketplace, wherever we choose to compete. Each of our brands will be a leader in its category.
Our first priority will be total dedication to anticipating and satisfying consumer needs. We intend to improve the consumer's life by providing products and superior quality, value and convenience. We will place the consumer first in every decision we make and in everything we do. Only this course of action will enable us to satisfy the needs of our employees for personal growth and meaningful careers. Only this course will enable our suppliers, distributors, trade partners, and shareholders to prosper along with us.
The common theme that runs through all the uncommon efforts of the Beatrice family is our unfailing commitment to quality and value. In meeting this challenge we will constantly break new ground and foster new ideas, develop new technologies, and establish new rules in the world marketplace. Our presence will be felt in a strong and positive way everywhere that our products are sold. This dedication extends to a true concern for the well-being of all communities in which we operate.
Quality ... value ... dedication to the consumer ... a commitment to excellence and originality ... maintaining our obligations to our employees, our shareholders, our suppliers, distributors, trading partners and to our communities.
These are the solid cornerstones on which the future of Beatrice will be built. These are the standards by which all of us will be judged. (Source: annual report) .
Mission of NCR Corporation
In 1988, NCR management set forth a corporate mission statement that formally recognized the company's duty to serve the interests of all stakeholders, not just those of stockholders. The mission of "creating value for our stakeholders" represented a blend of ethical principals and values:
This concludes our discussion on the Mission Statement.