Forums: Discussions for entrepreneurs and small business.

Blakeman, this is the second time I`ve run across your above. It bothers me a bit, because I`m thinking the rule doesn`t include the concept of product....does it?

I would say the purpose of all businesses is to exchange a product for a value. I understand that acquiring and keeping customers is essential, but without a product, why would customers be involved?

Some would say this is "semantics," or "nit-picking." My argument is that rules of the mind (definitions) are the same as SOPs for the business of life. In fact, a morality is exactly that---the articulated standards for operations and procedures when dealing with life.

There`s no such entity as a "business." It`s an abstract concept, like "the government," which ultimately resolves to actual human beings. I take your point that you`re trying to focus the business-owner on what`s perhaps the second most important aspect of what they`re doing. But I think we want to keep sight of the fact that without a product, there can`t be a business. :-) Would you agree?

The "hunter-gatherer" isn`t exchanging anything for a value. They`re using all the resources they acquire to survive. Farming, initially produces a surplus that exchanges work today for survival tomorrow.

But when we refer to "farming" as in this analogy, there`s an implied but unstated assumption that each farm is producing more than enough for the single farmer and family. The implication is there`s a surplus that the farm then sells to a market.

Simply learning how to plant and grow crops wasn`t sufficient to bring on Civilization. Go back to the original organization of the pilgrims, arriving in America. They set up farms under a communal system, and grew enough to barely survive. It wasn`t until they decided to expand each farm to produce *surplus* that they began running businesses and introduced capitalism into the equation.

Additionally, the hunter-gatherer doesn`t own the resources of nuts and berries. They use those resources, relying on Nature to replenish them. The farmer may or may not own the produce from the farm, depending on the political environment. Given the principle of personal ownership, it then becomes valuable to the farmer to replenish their resources.

That would mean holding back "seeds" for the plants they intend to renew or repeat each season. Hence the term "seed" money, improperly used in my opinion. "Re-invest" is a better term, and that means having some sort of surplus.

excellent post CraigL.

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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words

Craig,

Great thoughts, thanks.  Some smart/important guy came up with the "acquire and retain customers" statement - I just stole it (I think Da Vinci said the best artists are just the best plagiarists? :)  ).  

But the "Exchanging a product for a value" statement is not inclusive enough for me as a purpose for business because it doesn`t address profit, customer satisfaction, and a number of other things.  (If I don`t have a product or service, I can`t acquire customers, so it`s a given in my statement.)

I can "exchange a product for a value" and go out of business quickly because my value wasn`t high enough or I treated customers or employees badly, had lousy processes, awful suppliers, etc.   Whereas the "retain" part of the "acquire and retain customers" requires that I sell at a profit, treat my customers and employees well, plan for the future, etc - all so that I can be around to retain the customers I acquired by exchanging the product.    For me it`s much more inclusive.  I haven`t found a business it doesn`t apply to.

Re: building a great product (or service) - this only makes it easier to acquire and retain customers - you can actually do it quite well with a bad one, so I can`t see that a product`s worth or quality is the single most important factor that make`s or breaks a company.   It`s just a really important factor (maybe #3 behind acquire and retain?).

It seems to me that "exchanging a product (or service) for a value" describes very well what businesses do - maybe the key activity, but for me "acquiring and retaining customers" helps me sum up the purpose of a business more inclusively.



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Team Nimbus facilitates peer teams who advise each other from their collective business experience to raise profits in less time, so they can focus on the passion that brought them into business in the first place. We help move their business from survival, through profitable success, to significance.

Alright, that makes sense ;-) My argument was with the stress on the ONLY reason for a business to exist.

I think you`re right, that although we can have formal and technical definitions, we also have to have the "Reader`s Digest" version we can use on a daily basis. As long as you`re fully aware that without a product, gaining customers is moot, then it works.

I would say, though, that all your logical questions as to value are the foundation of the business process itself. It`s why we have schools, talk with people, have mentors, and learn to "run" a business.

To use your example, if you exchange a product for a value, then go broke, it`s exactly true that you valued the product to low! And isn`t that what other threads here are discussing, how to correctly value our products? :-)

Contrary to what people sometimes say to me, I don`t have a problem with shorthand, summaries, and concepts wrapped up in a ball. I don`t mind aphorisms, cliches, and platitudes, as they quickly sum up huge amounts of wisdom and information. Where I get involved is when I see people discussing a problem based on such a summary, where they`ve inadvertantly lost sight of an important part of the underlying logic.

Someone once said that the answer to any question can be found in a properly asked question. I recently read another thing, that the answer to a complex problem is usually a simple solution.

Moving beyond the survival mode simply requires understanding one`s resources enough to build a surplus, then develop a market for that surplus. And so, we`re saying the same thing---developing a market. That`s another way to say, acquire and retain customers. :-)

Works for me! :)

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Team Nimbus facilitates peer teams who advise each other from their collective business experience to raise profits in less time, so they can focus on the passion that brought them into business in the first place. We help move their business from survival, through profitable success, to significance.