You finally made the decision to put up your own business.
Maybe you’re tired of making someone else richer, maybe you got laid off, maybe you have a terrible manager or colleagues, or maybe you want to make a dent in the world on your own.
Whatever your reason is for starting a business, understand these fundamental principles first before investing time and money on anything.
What Is a Business?
A business is an entity that is engaged in commerce. Commerce is the act of buying and selling goods and services.
This is the most basic definition of a business.
So whether you’re thinking of a corporation, LLC, non-profit, or a freelancer, you are considered to be a business.
Those examples above are business types or entities. They differ per country/region and may not be an option depending on a lot of factors.
That’s why I’m not going to dive into them because they are not fundamental principles.
What I’m about to go over below are.
Markets, Commerce, and the Economy
In economics, whenever there is a buyer and a seller, a market is formed. And wherever there is a market, there is an exchange of value that happens.
(If you get only one thing from this article, let it be this.)
You don’t think about it this way but this exchange of value happens billions of times each day.
Here are a few examples to illustrate this:
- Buying something on Amazon: you pay with your money in exchange for the product.
- Selling your services as a freelancer and a client pays for it.
- Rendering work as an employee with a company in exchange for wages and salaries.
All these are examples of markets.
The fundamental principle behind markets is an exchange of value.
Exchange of Value
Value is not limited to monetary value.
While this may be the most common, there’s so much behind this concept that there are books written about it.
The important thing to remember about value is that it’s different for everybody.
An iPhone’s price might be worth it to some but not to others.
Your salary can either be high or low depending on the person.
Regardless, value is created for both parties in the market. It’s not one-sided.
Or more specifically, it cannot stay one-sides for a long time.
If there is no exchange of value
How Your Business Fits in the Equation
The purpose of any business is to create a customer. Because no business exists by itself, it is part of a society and, therefore, has to fulfill a social obligation and need. And this is to create value for customers through its products and/or services.
If a business can’t do these things, it won’t stay in business for long.
Remember, value isn’t just money or profits. That’s why saying that the purpose of a business is to make profits is wrong.
This means your business needs a strong focus on customers. Every decision and process you make has to help them make their lives easier. Not yours.
And this doesn’t have to be very complicated. Answer these questions and you can easily determine if you are putting your customers first or yourself.
One simple way to make sure you are focusing on your customers is to go through the buyer utility map. Look at each step of their buying journey and how you fit in. Chances are, you’re focusing on one area (just like the rest) and neglecting a lot more. These are your opportunities to add more value.
Food for Thought
You don’t have to go far to see how exchange of value happens and how the smallest details affect your business.
In the last 12 months, when the pandemic started, a lot of businesses were forced to shut down. Or more specifically, forced to move online unless they were essential businesses.
I might be biased since I worked in digital marketing for over a decade already, but I noticed that businesses who switched easily have been investing in their online properties for a while now. Those that were affected by the lockdowns were those who neglected the realities that people’s buying behavior have changed a lot.
Using those two examples, you can see that those who invested earlier to their digital properties were looking ahead and, more importantly, focusing on their customers. They understand that having a website or updated profile on Google My Business or Yelp helps them add value to their customers.
Think about it. Don’t you hate it when you try to look for a place to buy your dinner, open up Google and you see recommendations about that Chinese place near you. You decided to drive by before you head back home only to find out that they are closed.
Over to You
Businesses don’t exist in a vacuum. As a leader, it’s your responsibility to ensure the continuation and longevity of your business. And that can only be achieved if you can consistently add value to the lives of your customers.
If you can’t do that, you’ll find yourself in a predicament similar to a lot of other businesses are facing right now.
Focus on creating value for your customers. That’s the only thing you need put your energies on. The more value you deliver, the more customers you get. The more customers you get, the more profits you earn. The more profits you earn, the more people you can hire to help grow your business. The bigger your business grows, the more value you can create.
That is the virtuous cycle you should be aiming for.
Is your business delivering value and creating customers? Agree? Disagree? Let me know in the comments below.