Testimony Plaza #31 Orhuwhorun Road, Udu. Delta State
We would commence this write up by stating what the Economist thinks about compensation and rewards, as regards every effort put towards value generation, value engagements, and various activities we undertake, that pertains to life and sustenance or survival. And of cause money!
Factors of production and the rewards they offer for life are: land for rent; labor for wages/salaries; capital for interest and entrepreneur for profit. The aspect that time plays in the realization of all these rewards cannot be overemphasized – in this sense actually, we can claim rightfully, that time, initiative and creativity are the real factors or drivers of production. Or we can put it in a straighter logic, by saying that these are the final ingredients needed to work out production (in tandem) with the basic factors,into full realization.
Our generation, in the Nigeria of today, is solely responsible for the optimum application of our national productive time, initiative and creativity for growth and a desired standard of living.
The factors of production themselves are always interwoven and each can be expanded to fit into our very personalities, so to speak. While they serve as a focus for life generally, it can be said that they also form our core behavioral/emotional dispositions towards life;although this may not be the primary leanings of this thesis for the moment.
As a Business Turnaround Manager for some time now, and a seminar discussant in various fora, I have come to realize certain strong psychological tendencies in doing business and also identifying accurately, to a large extent, the individual conditions and circumstances were business endeavors can really thrive – it is the same thing a farmers does, when he instinctively knows and identifies a fertile land where he can do his cropping for the present season. The simply definition of business so far has been ‘‘The Business of Business is Business’’. And the business of doing business, so far, is for the sole purpose of making adequate profit that will sustain that business venture on a long term.The driver of any business motive is profit and sustaining that profit margin on an increasing basis.
Quickly, let us consider these few areas we need to look into when answering the question,‘‘BUSINESS PROFITS – WHERE CAN WE FIND THEM?’’
Finding Profit in ‘‘THE MAN’’ – The Personality Behind The Business: As a man who have had many ‘‘small starts’’ in various business ventures, I dare say that the informal learning aspect of all businesses (learning on the job) is far greater than whatever we can ever grasps from schools and text books. I have also had many friends, who at first glance, I instinctively know that they cannot do business in the real sense of seeking profit and progressing in a steady fashion, as business endeavors actually demand, irrespective of what they say or whatever lofty ideas they like to throw about. This again, brings us to the psychological disposition I talked about previously and a need to understand human personalities and the various aspects of the economic outlook and behavior they fit into. Lack of wisdom in this area will make a person begin to look for an entrepreneur in a laborer who is cut out for mere wages, or in a capital provider who is cut out for interest accumulation, or a rent seeker from land and real estate.
Entrepreneurs are people set apart and naturally wired to look for, acquire and understand profit. The nature of their investment is anchored on patience, perseverance and experience. Their real satisfaction lie in seeing their investment begin to bear ‘‘children’’ and grand ‘‘children’’, as we will refer to the term profit from henceforth, for purposes of better understanding of the core concepts in discourse.Some people are not just cut out for business – and I always tell them so, when they approach me for guidance. How I came by that knowledge? I don’t know! Safe for a kind of native six-sense garnered from years of experience in the field of promoting and financing small business people. If such a personality forcefully involveshimself in any business venture without adequately testing his psychological disposition in this respect – he will fail from the word go. (For more on understanding personality types and dispositions, it will do us well to read Tim F. LaHaye’s
Finding Profit within ‘‘The Business’’: Business profits are always ‘‘more than meets the eyes’’! I remember astory where a wealthy man who just died and left a fortune and a business for his eldest son, who had a wife, who had a greedy eye in the business of her father in law, for personal enjoyment and prestige. She single-handedly lavished the whole estate of his inheritance in less than two years, and after wrecking and bringing the business and husband down;who solely depended on his father’s wealth for his own status and lazy pride;she went ahead and divorced him and remarried into another wealthy family – to recommence the same cycle again! This is a story for another day, but the moral here isto throw light into a behavioral type in non-business-minded people, which points to the cankerworm mentality (this should not be mistaken for the grasshopper mentality we know very well in the scriptures, which cowers easily in self-defeat). If you are in business with maybe, a partner, or friend or another family member, you must make sure you investigate thoroughly, if this other person suffers from the cankerworm mentality or if he/she is a real entrepreneur, naturally wired for the gains in profit – as deceptively cunning in its accumulation process, as it is?Or you can investigate yourself for any trace of a self-cultivated cankerworm inside your guts that tempts you to think every money being generated from the business is available for ostentation and consumption for all immediate needs – no matter how frivolous they come.
If you ever have engaged in the process of distillation of any product orotherwise;that is, have you ever engaged in any process were you have to watch the slow, sometimes frustrating, grueling and gradual synthetization of anything.Maybe like extracting palm oil in the local pattern of squeezing the palm fruits, wash off the lush flesh in water, and then boil for several hours, before you can start seeing the thin film of oil extraction on the surface of the boiling solution.That you slowly and expertly scooped out with a spoon into another pail for another rounds of boiling…!Profit extraction in business is like the very same distillation process. But profit is worse, because in all these other natural synthetization/extraction processes, you can easily see the waste from the substance and clearly, expectantly, just wait for the time and process it takes to complete its separation. In business (especially the small business types), the substance, which is the profit you are looking for, is very deceptive and looks like the shadow – because it takes a long time to actually distill itself!It is often missed very thoroughly with the shadow, and disguises itself as the shadow for a long length of time, until patience and meticulous care and experience finally reveal its content to the dogged entrepreneur (when it finally comes out, it definitely justifies our patience!).So what is the shadow in business that looms very large over the real substance or intention for going into that business? It is the capital, or actual money, material that has been invested into the business for the sole aim of making a profit. If we are not careful enough, we can erode that seed in our hands by engaging in frivolous, superfluous expenditure of our core capital of investment, mixed with the little profit that we can generate for the period. Here, we may talk about matching our needs in business with relevant aspects of our available funds for doing the business.Profit in a business takes time to mature and it is never a wise decision to start eating and taking profit out of a young business as this will amount to a poultry farmer eating his chicks young.When the chicks should have been left to mature and in turn produce bountifully in eggs for the farmer over a longer period of time and greater returns.
Finding Profit in ‘‘Being Practical’’: Being practical and or realistic in doing business is simply being self-disciplined and sensible. And to recognize that not all the revenue or turnover from the business belongs to us the ‘‘owner’’. Owner here must be used in the sense of a supervisor or aGeneral Overseer who is placed over the vineyard of that business – where the philosophy or idea or intention or vision or call it whatever you wish, of establishing the business is the real owner of the business and should invariably control us the ‘‘owner’’ and serve as our employers in the business. Accountants call this, the Business Entity Concept, which speaks to the need for total and strict separation of the business from the personal needs/interest of the owner. And what are we, as the owners expected to do? Place ourselves on a salary monthly; reasonably pay ourselves from the business. This is especially for good accounting purpose;but truthfully, for the sake of us, the business owners. We know the temptation money at hand can cause! Form a habit of constantly sweeping your business profit – that little margin that you can consciously accumulate over time after paying yourself, into its rightful place or where it belongs … and how can we determine where our profit belong? I will tell you shortly. In the same vain, if perchance a business owner feels he deserves more pay from the business as profit grows, fine. Let him increase his remuneration and allowances accordingly, in a manner that is commensurate with his expectation of the margin he proposed in the business, but he must not take directly from the business and not be able to account for it. He must give a name to any money he takes away from the business and must be able to define the boundary strictly.
Finding Profit in ‘‘Business Consolidation and Reinvestment’’: If you have ever read the Richest Man in Babylonby George Samuel Clason, this statement will be instantly self-revealing to you. It is actually a fundamental concept in doing business and a guarantee for long term business success. In this context, business profit is regarded as the children of a business investment. The ageless advice to every investor/Businessman is that he must endeavor to reinvest his profit for a period of time, to engender business growth and expansion. Expansion of any business or idea is the sure way for sustaining that business or idea – for anything that cannot expand or grow dies off gradually. This is the key why we must always plough back our initially profit and ensure we build a surer ground to continue to earn a higher and better profit. For the inexperienced small business owner, he can quickly get excited by the initial inflow of profit and commence a feast promptly, to reward himself for the establishment of that business;hence the business or vision dies as soon as it commences. In this case what is the least expectation? The first generation of children (profits) produced by any business should be ploughed back into the business. Which to me, is the profit generated for at least one or two years, depending on the peculiar viability of that business (every entrepreneur should be able to self-determine his business cycles and seasons). The second generation, which are the grandchildren (from two years to five years. This is also the period of experiencing the highest level of business deaths and closures) should be graded into areas of highest and least generation of the profit (grandchildren) and the areas of highest generation should be fortified with more reinvestments (this time, we have truly deciphered where we must direct our greatest effort). In this period too, other concepts for consideration should really play strongly; like savings and maintaining a reserve fund for reasons of buffers, if the need should arise, and periods of unforeseen emergencies and downturns. The quote by Nelson Mandela, of blessed memory, that ‘‘after climbing a great hill, one suddenly finds that there are greater hills to climb’’, should be a guiding beacon to all intending small business people. As we conquer one challenge, we find there are many more challenges to conquer … and we should be aptly prepared psychologically, to successfully move from one challenge to the next in a string of conquest – this spells real success in any business venture. Profit accumulation and reinvestment helps a business grow faster and meets all impending challenges on the way of its growth.
Find Profit in ‘‘Business Goodwill’’:During a recent discussion with some colleagues in a seminar, it was mentioned that Coca Cola’s brand name alone is valued at $84Billiob USD. This is the same thing as the goodwill price of that world leader in soft drink and refreshment industry. This writeup is not really about such massive behemoth in the world stage of successful multi-national conglomerates.But it is telling, the potentials and opportunities ‘‘In A Name’’ for every honest and trustworthy endeavor of man. This takes time to develop and build – the only caveat is the incentive for gradual accumulation, patience, tenacity, assiduousness, industry, persistence and trust. Not everybody can generate the character base needed to be able to build goodwill to a desirable level that it’s finally translates into good profit. Goodwill is at the soul of every business and ensures a type of profit whichcan only come with time and commitment.What does goodwill translate into directly, that churns out profit for the business owner? It ensures a secured market share and size, it ensures a steady growth and level of market awareness, it fortifies the business in more responsible response to its name and standard, it avails us information that can be very useful to best competition at all times, it creates a stronger corporate identity and image, etc. the benefits in increased profit margins are truly endless. So ‘‘what is in a name?’’ profits and opportunities!
Finally, while we wish our teeming audience and other passing readers a successful week ahead; we are constrained to remind our young generation, most especially, of the virtue in sustaining and understanding the foundation for hard-work and strive that will help bring about the desired greatness we all have been waiting for.