What is business about?
If you are in business, whatever the type, it would serve you well to understand the reson d’être, or reason, a business exists. Anyone who ever participated in an economics class back at school would have learned this ‘basic principle’ of business. I admit, from experience many business owners have forgotten it, and surprisingly, even more business owners are not aware of it.
Business is all about selling a product or service in order to make a profit.
This is powerful stuff if you can make it your guiding principle behind everything that you do – but as I said, I have been surprised during my consultancy work that many business owners are completely unaware of it.
But I go one step further in assisting business owners lay down the foundation stone of their business. I have added some extra words (critical points) and a fourth element to motivate clients to continue achieving great results with their businesses. So here are my reasons why a business should exist:
A business (1) specialises in selling (2) specific products or services with a distinct point of difference in the market, (3) to make a profit (4) sustainably and continuously.
I have highlighted the critical words (which I have added) to the age-old economic phrase. My thinking behind customising the reason for a business’ existence lies in my belief that it is simply not good enough for a business to offer the same goods and services as the bulk of other like minded businesses, and nor is it good enough to experience industry benchmark returns/percentages of profit. Furthermore, the actions of every member within every business must be tuned for the long-term (sustainable and continuous) growth in profit.
This means that a static profit percentage following a predictable bell curve, leading to a flattening of growth, then decline, does not have to be law so long as the business focus is on integrating ‘different’ methodology, structure, and philosophies guaranteed to deliver solid sales growth. These approaches shun the ‘normal’, and widely accepted, asphyxiating year on year practice of draconian fiscal restraint and/or cutbacks. (Incidentally, it is my firm opinion, proven by 100’s of success stories, that the carte-blanche razoring of inputs and operational expenses of businesses actually diminishes sales over periods greater than 12 months). In other words, the actions of most business owners actually damage their business because they do not appreciate fully the implications of my description of why a business exists.