The Meaning of Business

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.

So, let’s look at these 4 elements and critical words in sequence.

  1. ‘Specialises in selling’: – many businesses involved in other industries such as real estate, new and used vehicle sale, telecommunications etc, readily accept the absolute necessity of ongoing and innovative training in sales. It accepted without second thought or complaint. All businesses are in the business of selling, and that is a fact!

However, when it comes to Food & Beverage sector businesses, most business owners believe they don’t have to focus on training staff to sell. The highly organised multi-nationals are not included in this group, but without any doubt in my mind, it defies belief as to how many staff members of F&B businesses HAVE NOT been trained in sales methods, techniques of up-selling, on-selling, cross promotions, local area marketing etc.

If your first ‘link in this chain’ – which is to become a specialist sales focused business – is made strong, with an unassailable level in your local market, then it must follow that the last ‘link in this chain’ will improve dramatically.

  1. ‘Specific products or services with a distinct point of difference in the market’: – it is simply not enough, in the 21st century, to offer products or services to the same level of quality (or value) to the bulk of other like-businesses out there. In my mind, it is inexcusable. We live in a day and age where everyone is seeking a better look, a better experience, a more up-market vehicle etc. Times have changed from the days where any old car would do! If it were not so, then their would be little interest in the great many lifestyle programmes on television – they seem to engulf most of our viewing time – which exalt the sophistication and value of quality.

Quality, when it comes to the Food & Beverage sector, is a point of difference! The reality is that the bulk of businesses continually scour for suppliers who can supply the lowest possible cost of goods. Whilst I am not advocating going berserk with spending on quality raw materials, there is a weighted balance towards better quality supplies that I do advocate. For instance, if you buy a basic computer, you get what you pay for. Spend a little more, and the number of features you can add to the ‘base’ model rises exponentially. Of course, there is a point you reach where for every dollar spent thereafter brings minimal (noticeable) improvements to the user. Like computers, food and beverages fall into the same pattern. I admit, that having worked in Asia, that making many business owners understand this is largely predicated on their ability to quantify or discern a significant difference in quality of somewhat more expensive inputs – e.g. Coffee. The reality is that the Asian palate, and the typical Asian consumer is not, on average, a sophisticated coffee drinker. Much the same could be said for wine – both liquids being well and truly entrenched in western culture for many years. What is significant is that in western cultures the pursuit of quality over price has come at a time of maturation of these markets, and the adjustment of palates able to taste quality differences.

In an immature and improving market, a shrewd business owner can take the ‘jump’ on all their competitors by borrowing this mature market approach, and deliver an overwhelming point of difference in all products/services delivered to end consumers. It may ‘cost’ a little more (and I prefer to call it an ‘investment) but it delivers primacy of place in your market and a huge uplift in sales since customers instantly acknowledge a vast improvement in value for money.

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