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  • April 21, 2024
  • Last Update May 7, 2023 10:40 am
  • Hannover


A business is created and exists in order that its owners can produce and sell a product or service to yield proceeds of more value than the prices to produce and sell it. This results in what’s called a profit.

Some firms don’t try this. They sell at a figure below their costs to produce and deliver the things. Some firms sell below cost deliberately and call the merchandise a “loss leader”—it is sold at a loss on the premise that purchasing customers will see other items sold by the identical firm and buy them with a resulting profit to the firm. Some, however, sell at a loss and don’t know it until it’s too late. Obviously not good!

Before this happens to you, let’s take a look at the basic principle of business, the explanation it exists, the raison d’être (pronounced rā zōn dĕt´rә). you ought to understand the very basic tenets of business before going any more. After we master the core idea, we are going to then last to the interrelationships of the varied business areas.

Fundamental principle of business: an individual who wants money offers to supply a service or product for someone who has the money. They agree, and upon completion of the transfer of the service or product, the one who has the money gives it to the person who wants the cash. this fashion both parties are satisfied.

Keep in mind that “the person having the cash calls the shots” before giving the cash to the one that wants the cash. It’s that simple!

Let’s have a look at the steps of the transaction. Person P provides a product or service (he is additionally called the provider). Person C wants the product or service and has the money (he is additionally called a client or customer). Person P agrees to supply the merchandise or service to Person

C in exchange for the cash. Person C agrees to the terms of the proposed arrangement. Person P provides the merchandise or service to

Person C and receives the cash for it.

That’s it! the method is that simple! Other factors might have to be considered, but in essence doing business requires following these simple steps. That’s what business is all about: providing something someone needs or wants in exchange for money.

What other factors should be considered? Let’s list them.

First, the merchandise or service should be exactly as agreed regarding quality and delivery.

Second, the time of payment must be determined. during a restaurant, food is obtained after it’s consumed. A movie is bought before it’s viewed during a picture palace. In contracting work like constructing a building, an “up-front” payment is sometimes made, so subsequent payments are made throughout the performance of the contract.

Third, the provider and customer must agree who will determine whether the standard of the merchandise is correct; the determination may be made by the customer or his agent like a top quality control manager employed by the customer’s company.

Fourth, quality level, price, and delivery terms must be understood before the contract is entered into. This function falls into the realm of project management.

The fifth point includes the opposite four: conduct business with the highest degree of ethics. If you do, all other aspects of business will fall into place and you’ll find that your customers will refer you more customers.

Deliver What You Promise. On Time!

Let’s jump ahead. You now have a thriving business with several employees. You now not do business as a personal. Those employees have assigned responsibilities. you’ve got payroll, insurance for them, and a number of other other matters to contemplate. you’re selling more and making extra money. However, the Person P to Person C interchange still exists. it’s simply achieved through your designated employees instead of directly with you. The premise of delivering what you promise—on time—still applies.

Let’s jump further ahead. As time passes, your business expands and you now have your own building, after all two of them, in numerous cities. you have got all the work and every one the rewards that you simply did previously (of course you do; why would you’ve got expanded if you were not being rewarded?) and now you furthermore mght face more local regulations.

The Person P to Person C interchange still exists, through your designated employees at the multiple locations rather than directly with you.

“Deliver what you promise. On time!” still applies.

More time elapses and your business has grown so large that you just decide to subcontract a number of the work to outside contractors. This means more contracts, more people involved, more cash made. The Person P to Person C interchange still exists. So does “Deliver what you promise. On time!”

This series of scenarios can continue until you become the chief executive officer (CEO) of a multi-billion dollar corporation. The size of the corporate and also the amount of cash change; the obligations do not. As CEO, you’re still Person P. you can’t say that the corporate is Person P. You are. the corporate isn’t someone. It exists as an entity on paper and you represent it. always remember that. And “Deliver what you promise. On time!”

Indeed, you’ll be able to and may expect the identical performances of others with whom you have got dealings once you are their customer. In fact, it’s best to not accommodate persons who don’t meet your standards.

They don’t deserve your business and you deserve better providers.

By now you see that certain aspects of business don’t change.

These apply to any or all businesses all the time. Your product or service is to be employed by a customer (Person C). The Person P (you) to Person C (customer) interchange still exists. The company’s expansions have not changed that. “Deliver What You Promise, On Time!” (Where have you heard that before?)

Here’s an example of the concept that “the person with the cash calls the shots.” You attend a restaurant. The hostess directs you to the nearest table that happens to be adjacent to a family with noisy kids.

You are the person with the cash. you are doing not must sit there just because the hostess either hasn’t thought much about your comfort or chose the table because it had been closer for the server. You point to another table and say you would like that one. you’ll tumble, usually without question. If an issue is raised about why you would like another table, ask the hostess whether the food is free. If the solution is that you just must buy the food today as on the other day, say that since you’re paying you would like the opposite table. The person having the cash calls the shots. Remember that principle, after you are the person with the money and also after you provide the merchandise and wish the money.

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