Really, what is business?
Roughly defined, a business is a repeatable process that:
- Creates and delivers something of value…
- That other people want or need…
- At a price they’re willing to pay…
- In a way that satisfies the customer’s needs and expectations…
- So that the business brings in sufficient profit to make it worthwhile for the owners to continue with the operation.
It doesn’t matter if you’re running a solo venture or a billion-dollar brand. Take any one of these five factors away, and you don’t have a business — you have something else.
- A venture that doesn’t create value for others is a hobby.
- A venture that doesn’t attract attention is a flop.
- A venture that doesn’t sell the value it creates is a non-profit.
- A venture that doesn’t deliver what it promises is a scam.
- A venture that doesn’t bring in enough money to keep operating will inevitably close.
At the core, every business is fundamentally a collection of five interdependent processes, each of which flows into the next:
- Value Creation: Discovering what people need, want, or could be encouraged to want, then creating it.
- Marketing: Attracting attention and building demand for what you’ve created.
- Sales: Turning prospective customers into paying customers by completing a transaction.
- Value Delivery: Giving your customers what you’ve promised and ensuring they’re satisfied with the transaction.
- Finance: Bringing in enough money to keep going and make your effort worthwhile.
If these five things sound simple, it’s because they are. Business is not (and has never been) rocket science — it’s simply a process of identifying a problem and finding a way to solve it in a way that benefits both parties.
Anyone who tries to make business sound more complicated than this is either trying to impress you or sell you something you don’t need.
Reference: Personal MBA by Josh Kaufman
