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The Only Four Things Any Business Does

8 Jul, 2019 by David Seamans

Well, let's fire the first shot across the bow to all those "experts" out there. Business is not complex. There are only four things that any business does.

4 Things a Business Does

  1. Sells Goods and Services
  2. Gets Paid for Goods and Services
  3. Buys Goods and Services
  4. Pays For Goods and Services

That's it. Simple. Straightforward.

Hiring Staff is Purchasing Labor, Payroll is Paying for Labor.

Taxes is only paying rent to the city, state or country. Paying dividends to shareholders is paying for service of a loan to a financial institution "roughly".

It is all extremely straight forward.

If nothing else remember the four things a business does. And as long as everything continues to flow around in the circle in a balanced and cohesive fashion, the business works fine.

But which of the four is the most important?

So ask yourself, if you were setting up a new business and putting systems into place, which system would you tackle first. If an "expert" came in and starting setting up your payroll first, how would you feel?

Truth is if you do not make sales you have no money to pay for anything and the other issues are irrelevant. Critically then, you as the business owner, must focus on every aspect of making sales.

Hint! That is why you were feeling edgy when the "expert" came in and started doing everything else BUT set up your invoices and sales processes. And that is why there is an uneasy feeling about any financial advice you get that does not address the issue of making more sales.

The most important one is "Sells Goods and Services"! Undoubtedly.

But how does one achieve more of the most important thing that a business must do. The business owner must understand the handles of the process and know how to quantify them.

The communication gap between the business owner and the bookkeeper / accountant

Ever notice when these two people or groups talk, pretty much the everyone's eyes start glazing over with boredom.

It is as if one side is talking Martian to the other side talking Greek (no offense intended to our Greek friends). Why is this happening?

It is because the business owner(s) must set direction for the business, determining the nature of the business and setting direction. This enables sales and related marketing to be accomplished. Without which, nothing else happens in the business.

The bookkeeper / accountant works in the other three areas reporting on success of cash collection, where the monies have been spent and that external and internal commitments and obligations have been met.

One is talking Martian; the other Greek.

How do we resolve this?

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David Seamans

Co-Founder at Elements, Retired CPA and Company Coach with 35 years of experience building better businesses.