Types of Businesses and Mission Statements
This lesson will help you earn points in the following judging rubric lines in the Entrepreneurship section: "Marketing Plan" and "Business Plan". It could also help with the "Future Goals" line in the Overall Impression section.
In this lesson, you will...
- Learn about different types of businesses
- Choose which type of business yours will be
- Write a mission statement for your business
What is a Business?
What comes to mind when you hear the word ‘business’? You might think of a local farm stand, a grocery store, a bank, or a big technology company like Facebook or WhatsApp. A business is any organization or person that is doing something in exchange for money or another good. Businesses can make, buy, or sell goods (like a company that makes cars), or they can provide services (such as a mobile phone service company).
To run a business, you don’t need a storefront, a lot of employees, or even a physical product to sell. You don’t have to be an adults up to start your own business! There are plenty of young people who have started their own businesses. For example, Maddie Bradshaw started her business at the age of 13. She couldn’t find any school locker decorations she liked, so she decided to make and sell her own. She realized that the best person to understand what young people like and want to buy is another young person!
Different Types of Businesses
Usually we think of a business as a way to make money, but businesses can have other goals besides making money. These can be social goals, such as helping feed hungry people, or providing students with a better education. They can also be business goals such as creating eco-friendly products or providing customers with the best product possible. All business have one thing in common; they need to have some way to bring in money so that they can continue to operate. In this section, you will learn about three types of businesses: for-profits, non-profits, and social enterprises.
For profit businesses focus on earning a profit by selling goods or services. They can also have goals, such as creating the best products possible or having great customer service.
Make Money & Do Good
Social enterprises focus on doing something beyond making a profit, like helping solve a social issue. They use some of the profit they make to accomplish this goal.
- TOMS - TOMS is a clothing company. For every one pair of shoes that a customer buys, they donate a pair to someone in need. Their goal is to help people in need.
- Every Table - A healthy restaurant that has multiple locations. Some are in richer neighborhoods and some are in poor neighborhoods. The food in richer neighborhoods is sold at a higher price, and the money made from these sales is used to sell food for much cheaper in the poorer neighborhoods. Their goal is to provide healthy food to people who live in neighborhoods without a lot of healthy options.
Nonprofits exist to help solve a problem or contribute to a cause. They do not have the goal of making money.
- UNICEF -UNICEF provides resources communities who in urgent need, such as after a major natural disaster or a war.
- Technovation Girls - Technovation Girls helps girls around the world develop the skills to become technology and entrepreneurship leaders. Technovation Girls is able to keep operating through individual donations and grants given by the government and large corporations.
Here is each type of business explained by a food cart.
For-profit Food Cart
You start your food cart with the main goal of making money by selling delicious food to people. You spend the money you earn on yourself and on improving your business and food quality.
Social Enterprise Food Cart
You start a food cart with the main goal of raising awareness of hunger in your community. For every three meals you sell, you give one meal to a person in need. You spend some of the money you earn on improving your business and food quality, some of it on yourself, and some of it on providing meals for the hungry.
Nonprofit Food Cart
You start a food cart with the main goal to provide healthy food to people who can’t afford it. You decide to have a class every night that teaches families how to cook healthy food. You provide the ingredients and let them take all the food they make home to eat for dinner. You get a donation from a local bank to run your program. With this donation, you run your food cart to provide food to those in need.
Social enterprise is a relatively new category for companies, so don’t worry if you’re a little confused. For simplicity, think of social enterprise as being in between for-profit and non-profit business. It is up to the business to decide how far they want to lean to either side.
Watch this video to learn more about social enterprises:
As you develop your business during Technovation Girls, you might realize that your company falls somewhere between for-profit and nonprofit. That is completely okay. Your company will have the goal of solving the problem that you identify, but you will also want to generate revenue (money) so that you can keep the business running or scale it up (grow its size and impact). One thing that will help you stay true to the original goal of your business is to always stay close to your company’s mission statement.
A mission statement is a formal summary of the values of a company, organization, or individual. Mission statements help companies determine what is important and what is not, and clearly state who will be served and how. A mission statement is usually a short and simple sentence that outlines what the organization’s purpose is and how it accomplishes that.
In this lesson, you will create a mission statement for your business with your team and share it with your mentor. Your mission statement can change as your company grows but remember that this is the “heart” of your business. Try to stay true to this statement.
Tip: If you are stuck, look at some other organizations tackling hard challenges. Look at their mission statements and see what you can learn:
Nike: ”To bring inspiration and innovation to every athlete* in the world.” The legendary University of Oregon track and field coach, and Nike co-founder, Bill Bowerman said, “If you have a body, you are an athlete.”
Social Enterprise Example:
Kiva: “Kiva’s mission is to connect people through lending to alleviate poverty. We celebrate and support people looking to create a better future for themselves, their families and their communities.”
Amnesty International: “Our vision is of a world in which every person – regardless of race, religion, ethnicity, sexual orientation or gender identity – enjoys all of the human rights enshrined in the Universal Declaration of Human Rights (UDHR) and other internationally recognized human rights standards.”
Activity: Decide on a Type of Business
Now that you are more familiar with different types of businesses, it is time to start thinking about the business you want to build with your team.With your team, choose one type of business that you would like to be, for-profit, social enterprise or nonprofit.
To help you decide, discuss the following questions with your team.
- What type of business do you want yours to be? (for-profit, nonprofit, or social enterprise)
- What do you want to accomplish by opening your business?
- What are some of the goals of your business?
- How do you think you can sustain (keep it running) your business?
You don’t need to have the answers to all these questions today but it is important to keep thinking of these as you build your business plan. You can always change the type of business as you further develop your app and business plan!
Activity: Create your Mission Statement
With your team, you will develop a mission statement. A mission statement should be 2-3 sentences long and should describe the goals of your company. Here are some questions that will help guide your mission statement:
- What do we do?
- How do we do it?
- Whom do we do it for?
- What value are we bringing?
- Why do you think there are different types of businesses?
- What do you think advantages of different types of business are?
- What type of business do you think will be best in solving the community problem you are trying to tackle?
There are not always clear lines between for-profits and nonprofits, but there might be different tax responsibilities depending on how the business is structured and restrictions on how it can spend the money earned. In most countries, all businesses need to pay a tax to the government. The amount of tax they have to pay is greatly impacted by what type of business it is.
For example, in the United States, if you are a nonprofit, you do not have to pay as many taxes, and those who donate to you can get a tax break as well. However, it is not enough to just say you are a nonprofit or a social enterprise. You will need to follow rules and prove that you are following them. Each country’s law and rules are different. It is out of the scope of this competition to check and follow these rules but they are something that you should keep in mind when starting a business outside of Technovation Girls!