Mission statements usually provide a lighthouse that the company culture can look back to when the company loses track of itself.

When there is a mission statement to refer to, generally companies can maintain their track and avoid losing sight of what their core competencies actually are. Mission statements have been directly linked through research to greater returns on investment in companies. Measures such as return on equity have been found to be more than double in companies that have a written mission statement. Although it is difficult to determine what makes one mission statement better than another, the mere presence has a positive effect.

Several parts of a mission statement can help put the company in a good position. First, the statement should help determine what business the company is engaged in and what the company wants to become.

What is our business?

This is one of the most important questions in business. Determining the direction and purpose of your company can be a very difficult process. It must be specific enough for you to focus the direction of the company, while also giving enough flexibility that the company can evolve with changing times.

Mission statements are generally more focused on what the nature of the business is. Statement of purpose, statement of philosophy, statement of beliefs, statements of business, etc., are all analogous terms that can be used interchangeably. However, for our purposes we will use mission statement.

Next, there is sometimes a vision statement in addition to the mission statement.

What do we want to be?

This is more of a vision statement. Vision implies forward looking and as such, deals more with the future than the present. Even though mission and vision statements are sometimes used in the same way, it is important to know that there are some differences between the two.

More important than the actual differences are the ways in which the company treats these documents. If they are treated as a living document, and updated with changing times to reflect changes in the market place, they can become quite valuable.

Small business application

Why does it matter if a small business has a mission statement? It matters because starting with a plan at the foundation of a business will help create a business culture that is integrated with the purpose of the business. Without a mission statement, certain operations within the business may not be aware of the general purpose of the firm. As a small business owner, it is important to let your workers know what your business is about, and where it is headed.

Where there is no vision, the people perish. That comes from Proverbs 29:18, and it's very relevant to small business owners.