A business philosophy is a collection of fundamental guiding points for the employees, management team, and shareholders to abide by. Many new entrepreneurs have never heard of business philosophy and thus overlook its importance. It may sound non-important; however, it is a proven cost-effective method to transform your business for the better.
Underneath, we will discuss in detail what is a business philosophy, and why is it needed?
What Is a Business Philosophy?
Creating a business philosophy for your company is nothing too complicated. You can simply do it on your own if you are the sole founder, or alternatively collaborate with your management team.
The easy part is typing it all up in a document, while what is more difficult is figuring out what is important for your business. Moreover, it is important to highlight that although it is not legally binding to follow a business philosophy.
A business philosophy must be kept simple, if it has too many aspects it will likely begin to contradict itself, and it will be hard to follow. Generally, if there are going to be multiple components of your philosophy, the best way to arrange is using bullet points.
To give an example, a business philosophy of a supermarket can be things such as improving the lives of your customers by keeping your prices low, offering the best customer service, and giving away food that has gone out of date to charities.
A business philosophy is not just about maximizing your profits. It is also about explaining what you should aim for in order to continue providing value to your consumers.
Business Strategy.
Every business must have a strategy; the ultimate goal is to increase sales and profits. However, being obsessed with the bottom line is not a good way to run and grow a business. It is much better to ensure that you are offering a product or service that your customer base loves, and the increased sales will naturally come.
By incorporating a business philosophy, you will be able to keep the minds of your workers on keeping your customers happy. The issue with chasing just sales and profits is that this can lead to a deterioration of the quality of your offering.
Furthermore, many businesses will start resorting to increasing their prices in order to extract as much money from their consumer base. This will in turn lower the total value offered by their organization, decreasing demand.
Building Company Culture.
Company culture is also built upon the foundations of your company’s guiding philosophy. The best way to get your employees to care and be attentive to customers is to outline why through the business philosophy.
Company culture is about the way that the members of your company view the world and how they act. It is important to build a company culture, as it allows for the individual employees to work much better as a team.
As part of company culture, there are also core values that can be instilled through a business philosophy. These core values can promote attributes such as not being scared of taking a risk in order to see if it will provide extra value to your consumers. Another important core value can be being honest and abiding by the relevant laws.
Finally, company culture is something that everyone can unite over. Matters such as making sure that your technology is easy to use and runs fast. Another example is that your baked goods taste great and that you sell them at a fair price.
Key for Branding.
A business like people has a reputation. The reputation of your company will depend on how it operates, which in turn is down to the way the employees and leadership are acting. This is where the discussions surrounding the topic of what is a business philosophy and why it is needed comes in. Incorporating a business philosophy will help to influence the operation of your organization.
Some industries are more susceptible than others to controversy. But, you should not think that your company is immune, even if it is a part of a more positively looked up business sector. One of the ways to maintain a good public image is to make sure that you are a good employer. Furthermore, it is now also very important that you are operating in an eco-friendly way.
Also, there is branding, what consumers think when they are reminded of your company. If you are running a healthy food manufacturer, then it will benefit your business if your company philosophy upholds the importance of people having access to food that is good for them.
Motivation.
Being in business is not just about making money. There must be boundaries to what is viewed as acceptable as well as having a positive impact on those around you. Money is of course one of the factors that will motivate your employees. However, earning a lot of money can quickly get unexciting once you realize that it is not the most important thing.
A simple way to get your workforce motivated is for you to contribute to society in a good way. An example could be that you donate a good chunk of your net profit to charitable causes. Moreover, you can also donate some of your products to people in need, such as food and clothing.
This makes employees feel good about themselves and their company. They will be much more willing to contribute to the growth of the firm if they can see admirable aftermath.
In addition, many businesses also outline what should not be done. For example, some tech companies have philosophy points such as “don’t be evil” which urge their employees and management to only get involved in ethical sources of income.
Competitive Advantage.
The contents of your business philosophy are important, as they can be the spark for your business’ competitive advantage. A successful business is one that provides value. So based on what your business is involved in, you must make sure that you are focused on what is truly important. It is essentially like embedding an obsession into your company.
If you are running a luxury clothing company, then you must make sure that your business philosophy includes things such as using quality materials and employing only experienced craftsmen. Alternatively, if you are running a car dealership, you must be focused on having the lowest price. As well as making sure that the vehicles you sell are of good quality.
As long as your company maintains such a focus, it will specialize, resulting in expertise and also reputation in these points mentioned in the business philosophy. In the long run, this will turn into a powerful competitive advantage.
Vision.
The majority of businesses fail within 5 years of being founded. Lacking a quality business philosophy can increase the likeliness of this occurring as they lack the vision to continue operating. Vision is the last benefit that we will discuss in this content piece about what is a business philosophy and why is it needed.
The way business is done changes, and it will always continue to change, thanks to the volatility of consumer tastes as well as new breakthroughs in technology. A business philosophy does not have the ability to predict how you will be selling your furniture in two decades. However, it can set the principles that will allow you to continue being successful, such as always being polite and going out of your way to help your customers.
To add to this, the philosophy that you have developed for your company will allow your organization to be malleable in the face of change. Your workforce will have in mind the ingredients of success, which will allow them to identify new ways to accomplish the highlighted philosophies.
Read the article: Foundations of a Successful Business
