Person 1: What do you think the purpose of a business is?
Person 2: The purpose of a business is to make money, period.
Person 3: No, the purpose of a business is to make a difference, period.
I found this conversation flowing through my brain soon after I woke up this morning. Well, who is right, Person 2 or Person 3?
Well, it’s pretty clear to me that the purpose of a business can’t be just to make money or just to make a difference. It’s more complex and nuanced than that.
Then, the famous four-quadrant model popped into my head.
Eureka, there are actually four different kinds of businesses!
And I think this model applies pretty well to both very small independent professionals, and to huge enterprises.
Take a look:
On the horizontal axis is “money.” On the vertical axis is “difference.” And that divides businesses into four quadrants.
In quadrant #1 the business is low in making money and also low in making a difference. In other words, neither is very important to this kind of business. Essentially this is a dead business, just limping along, with no great purpose for even being. This business is a “failure.”
In quadrant #2 the business is high when it comes to money but low in making a difference. In this case, making money is the prime purpose of this kind of business. This is the stereotypical “soulless enterprise.” If a company is only about making money and cares little for people, it may be quite profitable, but bad for employees, customers, society, and the environment.
In quadrant #3 the business is high concerning difference and low concerning money. When making a difference is the highest priority and making money is not so important, you essentially have a “nonprofit.” Of course, there are real not-for-profits that get funding from sources other than sales, but there are for-profit companies who are so dedicated to making a difference that they struggle with being sustainable.
In quadrant #4 the business is high in both areas – in making a profit and in making a difference. This is a company in balance. Making a difference, really caring about people and society, and creating high-quality products and services go hand-in-hand with making a good profit. I’d call this the “entrepreneurial company.”
Now, of course, there are endless subtle degrees in each of the quadrants. However, I’ll bet you can identify a number of companies in each of these quadrants.
How does this relate to independent professionals like yourself?
What would it look like to be in each of these quadrants?
Quadrant #1. You’re in business only until you can get a real job. You have skills as an independent professional but you have very little passion or drive. You just get by and hope you can survive. Really, you have no business being in business!
Quadrant #2. Status, making money and ego-fulfillment are your primary focus. You work very hard to sell a lot of programs and services but you don’t really care if they make much of an impact. It’s more important to drive a fancy car, live in a beautiful home and be known as a success.
Quadrant #3. You love working with people and making a difference. It’s your obsession, your purpose in life. And when you have clients, you do a great job for them. But you tend to undercharge, depend mostly on referrals and don’t do a whole lot to get out there and land new clients.
Quadrant #4. As an independent professional, you are more balanced with making a difference and making money. Helping your clients is a high priority, but as an entrepreneur, you’re always thinking creatively about how to deliver services and programs that have a real impact while making good money.
In creating this model, I noticed that I work primarily with clients in quadrant #3 who want to move into quadrant #4. It’s hard to move people in quadrant #1 out of their apathy about business in general, and people in quadrant #2 don’t think they need help.
I’ve actually run my business from all four quadrants at one time or another. When I started my business and I had no idea what I was doing, and was always on the verge of bailing out and finding a real job. I was stuck in quadrant #1.
Then I slowly moved into quadrant #3 where I got really excited about my business and marketing ideas, but still struggled to make a decent living. Then, with my successes on the Internet, I spent some time in the land of quadrant #2 where I made a lot of money and ended up burning out.
Now I live more in quadrant #4 where finding balance is a priority. I’m now working more intensively with individual clients and conducting small group programs that are affordable while making a big difference.
What quadrant is your business in? Where would you like it to be?
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