Business what is it really?

What is Business? We use this word for many things but they all have some basic essential parts. I define Business as the producer or developer of something sells it for a type of compensation. Such as an egg , the farmer using raw materials and chickens produces an egg this egg is then sold for a compensation in this case of money to the consumer. It applies to several types of “business” such as manufacturing, farming, services, government and education.  Let’s look at each of these and how it meets the

“Producer” ---“Sale”-----“Compensation” model.  Let’s look at manufacturing, IBM builds a computer and sells it to Lockheed Martin to use in their products. IBM is the Producer, Lockheed the customer buys it for either money or another product (compensation). How about a service industry, Comcast (a cable company) provides a service (Product) cable service to a viewer in Chicago for a monetary fee per month (Compensation). Government is a little harder to follow but here goes, The United States government produces a safe environment (military) for IBM to do business (the Product) and IBM files tax returns that allows the USA to receive tax dollars (the Compensation).  Education of course follows with a University provides knowledge (the product) to the student in exchange for a monetary payment (compensation). Okay let’s really get out there and think about non-profits in most cases these are just a service style business. Let’s look at religion, Church ABC gives religious comfort, teaching, etc. (the Product)   to the congregation which in turn gives financial support to the church (compensation) to keep the Church open and continuing.

Products a producer can make are almost limited they maybe raw materials, finished products, chemicals, financial , consulting, training, educational, medical, or any other service. They can also be concepts or intellectual property more and more seen in these days.

What constitutes a sale for this purpose a sale is any exchange of product for compensation. Many times the compensation may not be exchanged and the right to purchase or the promise to exchange is the compensation.

What about retailers are they a business? Yes, they are in most cases both a service and manufacturing business. They buy a product (usually a finished product) for a reduced price and then they sell this to the consumer with additional added costs and a profit for a monetary fee (Compensation). They are a manufacturer as they are buying a product and they selling the improved product (delivered to you). But this is also a service because they charge for their expertise in buying it low and passing on some of the savings to you.

I hope you have a grasp of my concept of what a business is and how they are all pretty much the same. In the coming weeks we will be discussing how to determine if a business is truly a non-profit or really a profit business hiding behind a great cause. The difference in profit and bottom line profit and where that term comes from. How to figure out who really owns the business you are involved with and why they own this business. Why government bailouts are just a service industry with very high costs.

Look forward to seeing you each week. Please leave comments or questions in the comment box or e-mail me directly.  Have a Great Week !!!!!