In their simplest terms, a mission is the reason a business exists, while its vision is where the company seeks to be in the future. Mission and vision are two terms that light the path for businesses.

When you talk to SME owners or high-level executives in Turkey, you’ll hear most of them complain about not being able to profit enough. Sometimes this is due to market conditions, while at other times it’s because of bad management, although the administrator might not want to accept it. Yet the most basic goal of businesses is to attain profits higher than the market average and to surpass their competitors to ensure long-term existence in the market.

Businesses’ ability to maintain profitability despite negative market conditions is largely dependent on their adoption and implementation of strategic management principles. One of the most important among these principles is the institutionalization of the business on an executive level; in other words, the business should be run based on plans and principles determined with a scientific point of view, not discretionary decisions.

As most SMEs are family-run companies, they are generally run by the founder/entrepreneur or members of the family. These executives generally don’t lean towards institutionalization, either because they are unaware of the principles of scientific management or because they do not wish to curtail their freedom in managing the business. Unfortunately, this results in short-lived businesses with low profits.

At an institutionalized company, decisions are made based on set principles. This way, even if the executives change, the business can continue along the same path. Each department carries out its tasks in coordination with others, and employees work in accordance with a shared goal. The first principles that all employees must unite on are the mission and vision of a business.

In their simplest terms, a mission is the reason a business exists, while its vision is where the company seeks to be in the future. Mission and vision are two terms that light the path for businesses and guide all strategies, plans and goals it sets. As long as the business takes every step-in accordance with these two terms, there will be stability in management, very little arbitrariness, and synergy will be achieved on an executive level as all the decisions support one another.

One of the mistakes made most frequently by small business owners is to think that strategic management, mission and vision are only necessary for large businesses. This approach is wrong. Both tankers and rowboats need a steering wheel – the only difference is that the tanker’s is larger than the rowboat’s. Similarly, while large businesses need a mission and vision as part of a detailed strategic plan that’s been studied at more length, small businesses can be managed with a simpler approach.

In addition to the reason for the business’s existence, a mission statement can also include details about where and how it will produce which products, what its business philosophy and values are, and how it differs from other businesses. An effective mission statement must be known and adopted by the employees because only a mission that’s embraced and applied by the employees can lead a business to success. Additionally, it’s recommended that the mission statement include issues valued by the customers and other shareholders, as the present-day conditions of increased competition force businesses to be customer-focused.

To illustrate, Google’s mission statement is truly impressive: ‘To organize the world’s information and make it universally accessible’. Another classic mission statement can be found on a bronze plaque over the door of Newport News Shipbuilding, where it has stood unchanged since 1886: ‘We will build great ships. At a profit if we can. At a loss if we must. But we will build great ships.’ In contrast to the mission, the vision defines the goal the business seeks to achieve in the future, and it serves as a compass for company strategies.

After a business establishes its vision, the strategic management process and executive decisions are realized in accordance with this vision. In small businesses, the vision is generally set when employees adopt the founder or entrepreneur’s vision. In order to achieve this vision, the business sets long-term goals and carries out shorter-term operations. These goals must be definite, measurable and time sensitive. When the business changes its vision, it must re-evaluate its goals and operations. Popular Swedish music streaming outlet Spotify’s vision is simple yet comprehensive:

‘To become the operating system of music.’ Considered to be the progenitor of the mass production of automobiles, Henry Ford’s time-tested vision is another classic example: ‘For everyone to own a car.’

As the examples above illustrate, a successful mission and vision statement must be focused, clear and motivating. Ideas defined in this way and embraced by all employees will serve as the first step in institutionalizing a business, differentiating it from its competitors and thus making it more profitable and long-lived.