Starting a new business is an inherently risky venture but business owners can increase the chances of success through diligent planning. A common task undertaken by new business owners is creating a business plan -- essentially a road map describing what a business does, how it does it and how it will achieve profitability. A mission statement is a short summary of a business's purpose, which is a key element of a business plan.
A mission statement describes the basic goals of a business or any other organization. According to the U.S. Small Business Administration, a mission statement could be two words, two sentences, a paragraph, or even a single image. Whatever its form, a mission statement should give readers a clear idea of what a business does and its overall philosophy in a minimal amount of time.
A mission statement is commonly included as a part of the executive summary of a business plan and may be the very first thing that appears in a business plan. The executive summary provides a brief overview of the entire plan. The executive summary is the most important part of a business plan because it is the first section that potential investors, lenders and strategic partners read. A strong mission statement can set the tone for the executive summary of a business plan and may ultimately help a business attract investment, funding or business partners.
Another benefit of creating a mission statement is that it gives establishes a business's underlying purpose beyond the simple goal of making profit. This purpose can help guide the types of products and services the company offers as well as the company's policies. For example, an environmentally-conscious entrepreneur might include in his mission statement that his company will not use environmentally harmful production methods.
A mission statement can potentially be beneficial to a business by acting as form of advertisement. For instance, an entrepreneur might be able to attract business from other environmentally conscious individuals and businesses by including the mission statement in advertisements.