Since we'll be focusing on mission statements at our next Mogulettes meeting, I did a little research and found this definition on the SBA site (see full text here) to be very helpful:
DEVELOPING A STRATEGIC PLAN
The first step in the strategic planning process is an assessment of the
market. Businesses depend on consumers for their existence. If you are facing a rapidly growing consumer base, you probably will plan differently than if your clientele is stable or shrinking. If you are lucky enough to be in a business where brand loyalty still prevails, you may take risks that others cannot afford to take. Before you begin to assess the market, it is important that you complete a careful assessment of your own business and its goals.
The outcome of this self-assessment process is known as the mission statement. According to Glueck and Jauch (1984, p. 51), the mission can be seen as a link between performing some social function and the more specific targets or objectives of the organization. Another definition states that the mission statement is a term that refers to identifying an organization's current and future business. It is viewed as the primary objective of the organization (Rue and Byars 1983, p. 99). Because these authors are writing for an audience of managers or would-be managers of larger businesses, their definitions may sound a bit lofty. If, however, you go back to the earlier example of a successful small business, you can see it started with a aclear direction - what was to be achieved and, in a broad sense, how best to achieve it. While your own goal may be to survive, make a profit, be your own boss or even be rich, your business must first perform a social function, i.e., it must serve someone. Given this you must determine (1) the ultimate purpose and (2) the specific targets or objectives of your business.
Defining Your Business
A primary concern in defining a mission statement is addressing the question: What business are you in? Answering this may seem fairly easy: however, it can be a complex task. Determining the nature of your business should not be strictly tied to the specific product or service you currently produce. Rather, it must be tied to the result of your output -- your social function -- and the competencies you have developed in producing that output.
Management theorist Peter Drucker suggests that if the railroad companies of the early 1900s or the wagonmakers of the 1800s had defined their business purpose as that of developing a firm position in the transportation business, rather than limiting themselves strictly to the rail or wagon business, they might still enjoy the market positions they once did (Rue and Byars 1983, p. 101). The obvious concern here is to ensure that you do not define your business too narrowly, leaving yourself open to economic changes or competitive challenges that make you vulnerable. For example, an entrepreneur developed a device to provide greater security for homes and vehicles. But, by focusing on the product rather than the service it was meant to provide, he failed to consider other services that already provided essentially the same level of protection at lower costs.