What A Business Really Is
It's like a big opaque box. It's long and rectangular with a funnel at one end, holes in the middle, and a cash machine at the other end.
When I work with a new client, I spend the first month or two settling the business into some form of sustainable operations.
‘Simplicity is hard to build, easy to use, and hard to charge for. Complexity is easy to build, hard to use, and easy to charge for.’
Chris Sacca
Cash flow, accounts receivable, some shuffling of people sideways, or up, or out, these are typical.
The mix changes with each client, as you’d expect.
It’s a box
I like the concept of business as a big opaque box.
I tell the boss, ‘it’s a long rectangular box with a funnel at one end, holes in the middle, and a cash machine at the other end.’
‘This is your business,’ I say, ‘and this is how it works:’
You tip resources into the funnel. Raw materials, time, cash, prospects, outside consultants, equipment, subscriptions, etc. Everything you need to make your business operate, into the funnel it goes.
Then we have the holes in the middle. Out of these holes leak prospects that don’t convert to customers, wages, waste, nonproductive time, supplier payments, fees and charges, tax, etc.
And at the far end, there are products, services you supply, and a cash machine that prints money.
That’s your money.
Inside that box is a machine that converts a range of diverse inputs into cold hard cash for you and other owners.
The box makes others happy as well. Your employees get their wages, to do with as they wish. Your customers get the products and services they paid for. The government gets its share. Your suppliers get business. The community gets your largesse and the social benefits you bring.
‘All good,’ I tell them. ‘That’s how it should be.’
But it doesn’t stop there. That just sets the stage for the next bit.
You have one job
As the boss, your job (that never ends) is to fine tune the machinery inside the box so it runs as efficiently as possible.
Efficiency means this:
Less Resources -> More Cash
There are just two ways to achieve this:
Improve the systems inside the box
Plug the leakage from the holes in the middle.
That’s it. If I can get you to accept these, my job is done.
These are the guts of my work at Stratify (my own consulting entity), and the two consultancies I work alongside - The End Game (theendgame.com.au), and Eighth Mile Consulting (eighthmile.com.au).
They also sit at the core of TBS. With every article and every Note, I try to reinforce the simple business tactics that make these goals real.
