The word profit invokes thoughts of selfishness amongst some, benefit amongst others, and a necessity in family business. While the love of money may be the root of all evil, the pursuit of profit is necessary in order to sustain any ownership group’s goals. But what role should profit play in driving behaviors of business owners?
Recently, I was confronted with a discussion in which a person shared that the only goal of business should be the pursuit of profit. When this view is taken to its extreme, employees in a company end up being viewed as replaceable automatons and leadership drives towards ever increasing levels of accountability to the point that a business starts to represent a slave enterprise.
One of the most rewarding experiences of my consulting career has been to experience the many ways that families approach earning business profit as an essential goal, but not to the exclusion of other goals they may have as an ownership group. One family ownership group may choose to organize their enterprise in a way where work life balance is of primary importance, believing that the essence of humanity is not either work or play, but a balance between work and the enjoyment of life in its many forms.
Another family may view their enterprise as an entity whose financial performance is critical to achieve their philanthropic goals outside of the business. A return therefore becomes imperative not just to provide a comfortable living for owners, but to further support their efforts to impact the world in positive ways – sometimes to the benefit of the business, but often times without any spotlight to gain publicity or benefit.
One other reason many owners are concerned about profit is to sustain their ability to keep their workers employed. One of our clients shared with great pride about a long-term employee who has sent two children through medical school while working for her family business.
In all of the situations above, the owning families could choose to focus on profit to the exclusion of all other ownership goals. Instead they see profit merely as a tool to achieving something greater than themselves.
When it comes to leaving a legacy, if the legacy consists of dollars alone it is likely to be an empty legacy void of any real purpose. The lasting legacy runs far deeper than money. In fact, the families who pass on the strongest legacies rarely focus on wealth as their primary purpose, even though they may possess great wealth. Instead, they seek to create an impact on the world through their core beliefs, business practices and philanthropic efforts.
Profit is just a tool to help them complete their noble journeys.