Does Your Business Work?

A working economic system means the flow of your business works. Essentially the business is growing from transactions. The obvious working system is; cost of product $1 and sale price of product $2. The system begins to get muddled up and complicated once you consider multiple revenue & expense streams, business threats & economies of scales.

Scalability. If a business is scalable, it basically means the system is feasible. A business owner who makes origami for $3 and profits $1 has a good margin. But does the business have economies of scale once we start talking about larger volumes? If operations expand, would their working economic system still be feasible accounting for logistics expense, labor expenses, office expenses and other overheads. Would the quality of work diminish? How big is the market demand for origami?

These two fundamental characteristics are based on the presumption that you have a good and viable business idea in the first place! Let’s be honest, who would want to pay you for a piece of scrunched up paper? Or pay you to make farting noises with your arm pit…? Wait a moment, you could become a YouTube sensation with the latter idea and get tons of advertisement revenue!

Now we have a few things assumed; feasible idea, a working economic system & scalability of your business. Let’s talk about differentiation. Differentiation is what a ton of businesses focus on, except they call it marketing. Let’s face it, we aren’t building a hovering computer, so we need differentiation. And the best sort of differentiation for small businesses is product quality, features or service customisation. Yes, I left out price point. Now price point is very important, its often a vital factor consumers weight up between buying item A & B. But as small businesses owners, can we really afford to be a loss leader (making a loss on a product to gain market share) in a continually globalising economy against MNCs (multi national corporations) who have a much larger and efficient economies of scale. Enough doom and gloom. The point is, as a small business owner we need to publicize to the market and consumers that we have a substantially different product or service, or that we provide either a tangible or intangible advantage over our competitors. E.G. a cafe opens till 2am every night, its known as the social hub of a suburb and has a full menu operating full hours.