Listen up, entrepreneurs: This is what your business must have if you want it to succeed

Why do most businesses grow painfully slow while others maintain a healthy pace during their evolution? Why do some never get past the early success stage and get caught in a long time warp, while others make a clear break into the acceleration stage? Why do some businesses lose their smartest people while others inspire deep loyalty? Why do some businesses delight customers consistently while others struggle? The answer lies partly in one of the three building blocks in the ‘software of business’-its purpose. Businesses that start out of the entrepreneur’s compulsion rather than choice, often accept making money as their purpose.

At other times, an entrepreneur who starts a business out of choice, fails to understand when he or she has crossed the first three stages of business-existence, endurance and early success-and stands at the foothills of the acceleration stage. The purpose of business rarely gets defined and articulated, let alone spread across the organization and be part of the driving force.

If we think of the biggest and best companies that have created a legacy and impacted our society and economy in a meaningful way, we will see a clearly articulated purpose for each. When you build a car, are you trying to make some money or are you trying to make personal transport convenient and affordable?

Unfortunately, too many smart businessmen get misled into thinking that the purpose statement is a mere statement-too lofty to be of any practical use. Some otherwise intelligent business owners may actually think of it as a waste of their time to think and articulate their purpose. The truth is that the purpose statement captures the fundamental reason why the entrepreneur started the business and whether he or she would stay committed to it. It tells your employees, suppliers and customers why you exist and how you see the business in the future. Together, these two aspects keep people focused and productive. It is true that businesses need money to survive; so many businesses can afford not to articulate the business purpose too well during the initial stages of existence and endurance. But growing sustainably and growing well makes articulation of purpose an essential-not theoretical or avoidable-thing.

A clear purpose when communicated well attracts the right kind of people, keeps them inspired to give their best and helps the organization make the most of its processes.

Look at a part of the Tata Group’s purpose statement: “At the Tata Group, we are committed to improving the quality of life of the communities we serve. We do this by striving for leadership and global competitiveness in the business sectors in which we operate.”

Or that of the Gwalior-based cold chain logistics company ColdEX: “Our mission is to give our customers a competitive advantage through superior transportation and logistics solutions.”

Do these sound like hollow statements? Or do you believe employees and other stakeholders of these companies have an opportunity to be inspired by them?

The next time you think about growth, think of the first building block you as a leader owe to yourself. What’s your business’s purpose, really? Running a business without an inspiring purpose is like driving a car in a playground. You will enjoy the driving, but you will reach pretty much nowhere.

(Ravi Kiran is Co-Founder and Managing Partner, Friends of Ambition, the business growth platform in Middle India. This story first appeared in the Entrepreneur magazine in April 2013)