The Purpose of a Business is to Create and Keep a Customer

The ultimate purpose of a business is not simply to make money or to produce products. According to Theodore Levitt, the fundamental purpose of a business is to create and keep a customer.

All other business activities are in service of this primary goal.

The Supporting Logic:

1. Produce Value: To create and keep a customer, you must produce and deliver goods and services that people want and value.
2. Be Competitive: These offerings must be reasonably attractive in price and conditions relative to what competitors offer.
3. Be Profitable: To continue doing this, the business must generate enough revenue in excess of costs to attract and hold investors.
4. Be Strategic: This cannot happen by accident. The enterprise must have a clear, well-communicated, and frequently reviewed purpose, strategy, and plan.
5. Be Accountable: There must be a system of rewards, audits, and controls to ensure that what is intended gets done, and that failures are quickly rectified.

This definition goes far beyond the trite notion that businesses exist only to make money. Profit is the result of successfully creating and keeping customers, not the purpose itself.