The information from this article was sourced from The Personal MBA: Master the Art of Business. For details read the full book.
A business is often overly complicated by corporate jargon, while in reality, its core values are simple to understand.
In simple terms, a business is;
- Something that creates & delivers something of value
- Which other people need/want
- At a price which people are willing to pay
- In a way in which the customer’s needs as well as expectations are satisfied
- All so that the business earns enough profit for it to be worthwhile for the owners to continue
Whether you run a lemonade stand out of your backyard or own a billion-dollar company, they all follow each of these five factors.
A venture which doesn’t create value for others is a hobby.
A venture which does not sell the value it creates is a non-profit.
And a venture which does not deliver on its promise is a scam.
But also, a venture which does not turn a profit is unsustainable and will inevitably close.
Every business has 5 independent processes which each flows into the next;
- Value creation: Discovering what people want or need and then creating it.
- Marketing: Showing people and building demand for your creation.
- Sales: Turing prospective customers into actual customers.
- Value Delivery: Giving customers what you’ve promised and making sure they are satisfied.
- Finance: Generating enough profit to continue and to make your venture worthwhile.
While we can go into immense detail on each of these stages, ultimately business is no more than these 5 processes.
If you can clearly define each of these 5 processes, you’ll have a complete understanding of how a business works.
“A business is a repeatable process that makes money. Everything else is a hobby.” – Paul Freet