heritage
c.n.r

ben's
beans

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business

BBR



Business Savvy

In order to operate a successful business, we have to get our minds right. Our way of thinking is the difference between success and failure. Our thoughts determine our actions. Mind patterns can be improved and changed to our benefit.

You are invited to explore the following four common-sense pillars of business with me:
trust
synergy
specialisation
customer experience

and then we have a look at accounting ...


Pillar 1:
Trust & Contracts


Trustworthy Business is Good Business

People need to be able to trust you to do business with you. All business is about entering into a contract. It is very hard to enter into an agreement with a party that you don't or can't trust to keep their end of the bargain.

If you want to be successful in business, make sure people can trust you to:
do what you promised
sell quality products and services at a fair price


Elements of a Contract

Whenever you enter into an agreement - you can use the diagram below to make sure that you cover all the aspects.

Pieter van Zijl, a retired Magistrate, once told me: "a contract is only as good as the person who signs it."


Pillar 2: Synergy
(Oppose -> Compete -> Compliment)

Its better to Compete than to Oppose, but its even better to Compliment than to Compete.


Playing the ball or playing the man ?

The aim of the business is NOT to fight the competition - it is to serve the customer !

The result of duplicating what others are already doing (and thinking you can do it better) - is that your focus shifts from the game (the client / market) to the other team (the competition.)

You become so busy with out-manouvering the competition, that there is no time to serve or focus on your clients, and you lose the business.

The two teams are involved in a fist fight in the center of the field, while the spectators are leaving the stadion and demanding their money back.

Copy-CATing is born out of a opposition mentality and is a sign of Mental Lazyness !


Synergy

Synergy is when the combined result is greater than the achievement of individual efforts. It is when you try to complete the customer's experience by complimenting the products and services that your co-entrepreneurs are offering,


Pillar 3:
Specialisation

Specialisation is:

  1. "an intense focus on the client" with the aim of
  2. "meeting the uniqueness of the need in such a taylor made way" that the client is
  3. "satisfied and delighted to pay a significantly higher price".

Specialisation helps you to be THE BEST at what you do. It is born out of a mindset of excellence.

The most effective Market Setup is a combination of complimenting businesses that specialises in what they do.


Pillar 4:
Customer Experience

Life is not about money - it is about experiences. Customers return to a pleasant experience.

6 Guidelines for creating consistent pleasant customer experiences:

Be friendly ... SMILE .... make people feel welcome

Make it easy for people to do business with you . . .
(in terms of delivery, payment and selecting products and services)

Make sure you deliver excellent value at a fair price

Make sure you: FIRST understand the client's need, THEN give the BEST advice suiting HIS/HER pocket, and then deliver the correct goods at the right price when and where and how it it needed.

Find an opportunity to try and exceed the customer's expectation (under promise and over deliver).

Follow UP.


Accounting 101

We have to understand the mechanisms of the things that we work with every day. The small business owner have to have grip on accounting, mark-ups & margins, stock and overheads.


Accounting is about the FLOW of MONEY

the flow of money


Key concept 1:
"came from" and "went to"

You have to account for:
  • where did the money COME FROM (credit this account) (entry on the credit side (right side) of the T account) and
  • where did the money GO TO(debit this account) (entry on the debit side (left side) of the T account)

Key concept 2:
"All Inflow is NOT Income, All Outflow is NOT Expense"

If money flows into a business and you must give it back it is NOT income.
If money flows out of a business and you can get it back or you are giving it back, it is NOT an expense !
INCOME - EXPENSE = PROFIT and profit belongs to the OWNERS

Key concept 3:
"3 ways in & 3 ways out"

There are only three ways (modes / means of) money can flow INTO a business:
  1. From the owners (Equity) , (have to give this back)
  2. From borrowing (Liabilities), (have to give this back)
  3. From Income, (don't "owe" this to someone, don't have to "give it back")
There are only three ways (modes / means of) money can flow OUT OF a business:
  1. To the owners (Equity) , (giving it back)
  2. To repaying loans (Liabilities),(giving it back)
  3. To Expenses, (can't "get this back")

Why is Equity + Liabilities = Assets

because all the Assets that are IN the business was either financed by the Owners or via Loans.

Examples:

  • When the owner put money into the business ... it flows from equity (credit owner) to asset (debit bank).
  • When you take money from the bank and buy stock ... it flows from one asset (credit bank) to another asset (debit stock).
  • When you sell goods ... money flows from income (credit sales) to asset (debit bank) ... AND your client takes the goods from your stock (credit stock) and walks out of the door (debit cost of goods sold.)
  • When you buy fuel ... money flows from the asset (credit bank) to the expense (debit fuel).

Download Benico's Basic Course in Accounting.


heritage
c.n.r

ben's
beans

think
business

BBR


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