The Purpose of a business

[Isetech]

The problem, with reference to trades, we tend to see the amount of hard work we put into making the "boss" rich, without understanding the whole big picture.

The company registrations and taxes, how to manage the money and when to spend and not to spend. I started something a couple of months back and it has turned my financial situation around completely. I have moved from always being in an overdraft to almost in the 5 digit plus, hoping by June to have a R100 000.00 available for the rainy days, which by the way comes and go less frequently, but as you learn to manage your finances and stop just spending on stuff that you dont really need, or spending customers deposits. By the way this is one of the biggest downfalls for many small businesses.

Customer relationships, I have it, where people have worked as sub contractors and think because I offer them a small piece of the pie, they get greedy, without understanding that I have 10 years of good standing with the customer. When you get to 30 plus years in business you learn a few things that you will never learn from business school. Customer may not always be right but you need to respect the customer, do what you say you are going to do, finish projects on time and charge what the project is worth. I had a job last year which ran way over budget, like 200 hours over budget, I could have billed the customer for the 200 hours and they would have paid, however when I was reviewing the bill it seemed a little excessive, so I made a few adjustments and submitted the invoice. I might have lost a few bob, but the word of mouth advertising is worth way more. I would rather have 5 good paying customers, who trust me and I can trust, than 50 000 problems.

Like most things in life, people live way above their means and whine all the time about how they cant get through the month, yet they have all the fancy material junk, just like business, when you earn enough to pay cash for that nice 4x4 double cab with all the trims and a range rover for your wife, kids in private schools, then great, if not, dont show off with stuff you cant afford, landing a R10 M contract doesn't make you rich. I see too many contractors, all mouth and bling and too little cash in the bank.

[Isetech]

The one thing that many smart people learn very quickly "CASH IS KING" not just the coins and notes. It takes one bad customer to kill you cash flow.

I had one bad customer last year, I got caught, you would think by now that I would have learnt my lesson. I have learnt to move on as quickly as possible, trying to chase bad debts, not only negatively impacts your operation, but it can negatively impact everything, from your health and well being, to your train of thought and other things.

I have learnt to write off the bad debt and move forward as soon as possible. I could have paid cash for my house with all the bad debts, not just paid off my bond. When you start chasing money, it negatively affects everything, especially if you are are a small operation.

Dump the customer, learn not to waste time on bad payers, chances are they just horrible people in general, who always try screw anyone, claim the loss from your taxes, spread the word, so others dont get caught and move forward.

[Blurock]

The one thing that many smart people learn very quickly "CASH IS KING" not just the coins and notes. It takes one bad customer to kill you cash flow

@Isetec you are right. I have also lost money by chasing business and trusting people.
Nowadays I only do cash business. I have no accounts and no creditors and I sleep well at night. Ek skrik nie wakker nie!

I am hard assed when it comes to business. Why would people pay up front to import a dodgy, untested product, then wait 3 - 6 weeks for it to arrive, but you are not prepared to pay cash for a quality local product? I have turned away a lot of business because I refuse to allow terms, but I have also managed to get up front payments from municipalities and people who value my products and service.

Stick to your principles. There are no shortcuts in business and promises fade away in the mists of time.
Yes, and stay humble. Do you really need that flashy car, boat, house?

[Isetech]

There are way too many get rich quick, like overnight videos and people flashing nice cars and big houses on social media.

If you are smart and browse through the videos, like I have looking for that get rich quick method, you will notice one thing in common with most of them, they all seem to be linked in some way. Once you start taking note, you will find they are somehow tied together.

You dont get to have Tony Robbins or Gary V on your little podcast, unless you have some sort of connection, backing or links, or maybe links to oil, gold or in some cases governments.

If hard work was the route to riches, Elon wouldn't be the riches man in the word. I am sure there are many people out there who have put in more hours than many of the richest people in the world.

Like everything in life, goggins may not be the toughest in the world, and it didnt happen over night.

[Isetech]

Going back to "the purpose of a business" ... why you want the to start a business and what you are prepared to do to make that business work will determine the purpose and direction of the business.

For example, lets use me as an example and everyone will have a different purpose.

When I started out, I had no intention of become a huge corporate, I just wanted to make enough money to support my family and be my own boss, rather than making everyone rich from my time being exploited.

I tripped and landed on my face within a couple of weeks, I shuffled, adapted and moved forward, with the same vision. I tripped and fell more and more often, to a point that I wanted to give up. I went to the bank to try get finance for a vehicle, but that didn't go so well, they requested silly things like a business plan and financials and all the stuff, really who wastes time with all that unnecessary stuff. Apparently you do need it.

To this day I have never seen a financial statement for my business, if you have to ask me what my turnover or profit margin was for last month, I honestly couldn't answer that question. You could phone the guy who deals with my books and ask him, he would be able to answer the question.

IF you want to know what is happening with your project at any point, you phone me I can answer any questions regarding the status of the project, I could also give you a ball park figure on what it will cost and that is about it.

Something nobody will tell you about starting a business, to what extent are you prepared to sell your soul, what are you prepared to do to make it work, I dont mean the time and effort. You see business failing everyday, not because the person didnt have a business plan or a degree in business economics, they just weren't prepared to do what it takes to get to where they wanted to be.

The purpose of the business could be the motivation, just understand that not everyone has good intentions and they will expect more than you are prepared to offer , dont sell your soul for money, you will regret it at some point.

[Blurock]

The purpose of the business could be the motivation, just understand that not everyone has good intentions and they will expect more than you are prepared to offer , don't sell your soul for money, you will regret it at some point.

Agreed, don't sell your soul. If your motivation is just to make money, bear in mind that you can only steal from someone until you get caught!

Motivation may not be enough. You may be motivated to paint starry nights and cornfields like Van Gogh, but if there's no customer to sell it too, you will die a pauper. The purpose of a business is to create a customer. What's the use of having a business if nobody knows about you? You have to advertise, you have to do PR, you have to get word of mouth business. There is no other purpose unless you work for a charity or for the government.

To quote Peter Drucker, guru of marketing, a business enterprise has only two basic functions: marketing and innovation. Innovation is tailoring your product or service to serve a certain market, to improve your product or service. Basically it is finding that one thing that the customer needs or want. Marketing is telling the customer that you can fill that need. Customer satisfaction is what sells a business, not your product or smiley faces.

I have been a "Mystery Shopper" for a number of businesses from service stations to banks. The bottom line is what was the customer's experience? That is what sells a business!

[Blurock]

Just heard yesterday that sadly, the guys who had hijacked our previous business are on the skids and are busy retrenching staff.
It is so sad to see a business that was built with innovation and passion into a sought after supplier with excellent products and customer service go down the drain.
The reason for this is that the guys were not interested in people (customers and staff who are the core of your business) but only in chasing money.

Their greed allowed them to oversell on credit and not being able to generate sufficient cash flow to pay their suppliers and creditors.
Poor quality and service is now accelerating the demise of the business.

[Blurock]

So I think that we can agree that we do not have a tree or a machine to print money. Money has to come from another source, the client or customer.
Do your staff know this? They should also know that the customer is king and should be treated as such.
Staff should also realise that they have internal customers (and suppliers). One department relies on another to deliver so that they can perform. A good example of this is a symphony orchestra where the soloist cannot perform without the backing of the full orchestra and conductor. One false or missing note can ruin the performance.
Actors cannot perform without a wardrobe, makeup, lights and a support team.

In the late 70's consultants at McKinsey & Company developed the 7S model. It is based on the premise that an organization's effectiveness depends on the alignment of seven factors: strategy, structure, systems, skills, staff, style, and shared values. Does your staff have the same vision and focus and do they share your values? If not you may find it difficult to manage and do business.

[Blurock]

So if the customer is king, why do shopkeepers park their cars in front of their own shop so that there is no parking for customers? The customer now has the opportunity to walk past all the other shops and see all the alternatives he can get from competitors.

If the customer is king, why does the staff at the till ignore the customer and continue talking to the teller next door as if the customer is invisible?

I was impressed the other day on how a young lady at Postnet treated customers on a very busy morning. Each new arrival was greeted in a courteous and friendly manner and made to understand that they will be attended to ASAP. People don't want to be ignored and they do want to see a friendly and smiling face. Create a welcoming atmosphere and customers will come back. A value add often leads to the ability to charge a premium price.