The Two Most Important Elements Of Business
Small business owners typically have to wear all sorts of hats in the company. The typical small business owner may fill the role of CEO, COO, CFO, and CMO at the executive level, and it is common for the same owner to have to regularly fill the role of frontline employees, such as the administrative assistant, the tech team, and the sales rep. Trying to balance all of this out can be exhausting. And even worse—it can be damaging to the business.
As an entrepreneur it is easy to get distracted by non-essential tasks. This can be devastating because in the early stages of a business’ life, staying afloat is often the number one challenge. Therefore, there is not a huge buffer of cash to allow for business mistakes and non-essential tasks to eat up an entrepreneur’s time. Peter Drucker is widely regarded as one of the greatest business minds to ever live. He emphatically proclaimed there were two business processes that trumped everything else—innovation and marketing.
Cash is king. In business, there is only one way to survive over the long-term: a company must consistently make more than it spends. This needs to be done on a monthly, quarterly, and annual basis. Now, there are times of course, especially in the early stages, when a company may undergo a cash crunch and raise additional investment capital or secure debt financing in order to meet payroll, keep the lights on, and continue to move forward. Eventually, however, those liquidity options disappear. And when they do, if a company is not self-supportive, then it will fail.
Now, this may sound extremely capitalistic, but a business primary concern must be to generate more revenue than it spends on a consistent basis, and this is only done by developing a product or service the market wants and then presenting that product to the market. That’s it. Business operations, in all of their extreme complexity, can actually be summarized in that simple point. This is why Drucker said all that matters is innovation (developing a product) and marketing (selling it) are the keys to sustained business success.
Now, as an entrepreneur, it is incredibly easy to get completely distracted from these two key points. It is easy to let non-essential tasks eat up hours of your day. Here is a list of non-essential tasks that should be given extremely limited attention in the early stages of a business:
- Posh office space
- Office furniture
- Paint colors for the wall
- Technology that is not necessary for product development and marketing
- Vendor relationships that are not directly related to product development and marketing
- Meetings about things other than product development and marketing
- Writing out 5 year business plans that include talks of taking over the known universe
This list is not exhaustive by any means, but hopefully it communicates the point that everything outside of product innovation and marketing should be given limited attention. Focus on these two aspects of business, and the probability of success will be greatly improved.
Danielle Thomas is a writer for merchantseek.com, where you can find the best credit card processing solution for your business.