The 5 Parts of Every Business

* Roughly defined, a business is a repeatable process that:

* 1. Creates and delivers something of value...

* 2. That other people want or need...

* 3. At a price they're willing to pay...

* 4. In a way that satisfies the customer's needs and expectations...

* 5. So that the business brings in enough profit to make it worthwhile for the owners to continue operation.

* Take away any one of these five parts, and it's not a business.

* When planning a new business or analyzing an existing venture, always begin with the five parts - they will help you discover any major issues or gaps quickly.

You can think about a business as a repeatable process that makes money. So, businesses are things that create and deliver something of value, to people who want or need that something of value, at a price they're willing to pay, and in a way that satisfies their needs and expectations, and allows the business to bring in enough money to keep going. It's not rocket science.

Businesses continue to exist by creating and delivering things of value to people who are willing to pay for them, in a way that makes money, very simply stated.

Now, a way that you can think about this, or use this very basic definition of what a business is, and what it does, is to break up the operations of a business into component parts, all of which are essential. And what I call those is "The 5 Core Business Processes."

Core Process #1: Value Creation. Every single business has to create something of value. If it doesn't create something of value, it's not a business, it's something else. Easy enough.

Core Process #2: Marketing. Businesses must get the attention of people who might want or need the things of value that it is creating. Marketing is the process of getting someone's attention, and making them interested in learning more about what it is that you have to offer.

Core Process #3: Sales. Sales is the process of taking somebody who says, "Yes, I'm interested! I want to learn more about what you have," (that's a prospect,) and then converting them into a paying customer. So they actually pull out their wallet or their checkbook or their credit card, and hand it over to you and say, "Yes, I'll take one."

Core Process #4: Value Delivery. Value delivery is the counterpart to value creation which is that you've created something of value and somebody wants one. Value delivery is the process of actually giving it to them. And if you don't have value delivery, it's not a business, it's a scam. (both laugh) So, a scammer's a person who takes somebody's money, and doesn't give them anything, which you don't want to be. So, value delivery is a huge part. And the end goal of the value delivery process is not just a customer, but a happy customer, someone who has received what you've promised them, and is really happy, excited, and glad that they gave you their money for this wonderful thing that's improved their life.

Core Process #5: Finance. Finance is a way of analying the operations of the business to figure out: How much money are you spending? How much money are you making? And are you making more than you're spending, very basically. And most people think of finance as the part where they make sure they're making as much money as humanly possible. And that's part of it. You want to make as much money as you can, but the major part, which we'll talk about in detail, is this idea of sufficiency. Are you bringing in enough? Is it worth it for you to keep operating? Is it worth it for you to keep going? And my definition of a successful business is that you're bringing in more money than you're spending, and it's enough for you to make it worth it for you to keep doing what you're doing, that's a successful business. It doesn't matter if you're bringing in $1 billion, or $10. If it's enough, you're doing what you're supposed to be doing.