The Nature of Business
Staff Article, written by Don WIlde
The word 'business' has many meanings and many connotations for different people. My intent is to broaden your horizons a bit so you're more aware of the broader range of opportunities that are now available.
Here's a basic definition that's pretty close to the root of it.
Business is the art of leveraging other resources to provide income for yourself.
Let's break that down:
Business is
As I stated at the top, the word means a lot of different things. To most people it means creating a legally-recognized entity such as a corporation and opening a brick-and-mortar storefront. In this article, I'm going to argue for a more general usage to open you up to new ideas.
the art
If business were an engineering discipline that you could study in a book, MBA's would rule the world. It isn't, but that's no reason to give up trying. Most of the engineers I know are tinkerers and try-it-out types who really like turning wrenches. Engineers just put a fancy name on it, that's all: empirical.
of leveraging
Leverage is a term well known to engineers, whether it's a mechanical fulcrum and lever or a transistor amplifier. Just as a lever must use another entity -- the earth, usually -- to provide the resistance the lever works against, leverage is the act of combining forces in order to accomplish a goal.
other resources
Those forces can include the desire for emotional satisfaction in a customer, the availability of products for sale by others, the knowledge and experience of skilled people, or the ability of someone you know to vouch for your integrity to the customer. The resources available on our planet are bountiful; business is a matter of bringing them together in a specific system that succeeds in satisfying all parties concerned.
The second order of leverage, once such a system has been conceived, it to cause it to repeat over and over again without further input, and the third order is to pay smart people to design such systems for you, but those are the subject of further articles.
to provide income
Income, also known as 'net monetary gain' or 'profit', is the goal. Many people have other goals besides money, but the primary goal for an organism is first to survive. In today's civilization, that means generating enough income to offset your expenses after offsetting the costs of doing the business. Many of the other goals people aspire to can also be satisfied by first accumulating money, and, indeed, without making enough money to do well in life most other goals will not be achieved.
for yourself
Unlike an employment contract, there is no limit to the income that you can bring your way when you are doing business. Many people shoot themselves in the foot when they imagine this, thinking that if they made gobs of money they would somehow manage to kill themselves, or get arrested by the government, or lose all their friends, or something, but a clear-headed engineer should rest assured that if he somehow makes too much money he'll figure out those little details.
Until recently, most people thought that a job provided security, but recent events have shown more clearly than ever that that is not true. Large numbers of people, including engineers, are being shown the door with little warning. His (her) continued employment depends on a lot of factors outside of his own skills and merit, too, a factor in a lot of the stress-related health problems many "successful" engineers suffer.
These days, business is little more risky than employment. It still is, don't get me wrong. Usually, even the dumbest employee gets several months before being axed, whereas a businessman or woman starts from zero income and still can't dodge his (her) bills.
The upside, however, is that a businessperson is not limited in his (her) opportunity. Consider the following wage scenarios:
A warehouseman with no skills and no high school degree can make $7.25 to $20 per hour, depending on whether he joins a union, just for stacking boxes. That's $14,500 - $40,000 annually, assuming the traditional 40 hour pay week. Most warehouse jobs are not constant work, as well, so the hourly rate for actual work goes up.
A skilled engineer with at least four years of college and a degree, often more, might make $150,000 to $200,000 per year -- in a thriving economy -- after ten to twenty years of proving him(her)self, and rarely working only 40 hours a week while doing so.
In other words, our engineer sweats blood for years to work his way up through the competitive professional ranks, continually learning new technologies and new skills, and he only makes, at the peak of his career, ten to twenty times what the box-mover makes.
Think about it. Your employer is making new products from the fruit of your labor that he can sell for years and years. If he's a big company, he'll leverage your skills into dozens of products and thousands and thousands of units.
His shoes are shinier than yours are, and it's pretty likely that his car is a lot nicer. Why? Because you have chosen to trade your time and your talent and your education for a little bit of his money, and a little bit of a cushion against insecurity.
You don't have to make that sacrifice, and the first step is to believe that understanding and mastering the nature of business is within your grasp. The artificial ceiling on your earnings can be overcome, but first you have to understand it and realize that you can get beyond it.