What is good business?
Someone wise asked, “what is good business?” and what are the factors required for a business to come to fruition?
Good Business is providing value to customers, in a socially responsible way, at a sustainable profit, while building and growing assets.
There are four factors required for a business to come to fruition.
- Entrepreneur(s) who understands and builds something of value to a customer who is willing to pay for it. Value could come from inventing a product to fill an un-articulated or unmet need, or by using a new or old technology in a novel way and solving a new use case or filling a gap in a product or integration gap in a chain of products or by licensing a technological invention to a business.
- Customer(s) or user(s) who see this value and use the product or feature or service is willing to pay. The cost of building and providing the value is less than what the customer is willing to pay, giving the provider a profit margin. A business that does not have a gross profit margin but is rapidly growing to reach profitability (due to economies of scale, or due to network effects or virality) might have good potential. It’s unclear whether that makes a good business or a good investment for an investor.
- People & team — Every business has a team of people, even if they are not paid by the business. There could be free advisers, mentors, supporters (friends/family). There could also be a team employed by the business. A team of people (leadership roles or rank-and-file) with high integrity and commitment.
- The mechanics and process of building, serving the customer and realizing the profit — From customer research, product definition, customer validation, marketing the product, setting up channels (if it’s a consumer product), building partnerships (channel or marketing or) or setting up sales if it’s a product that requires selling to enterprises or if it requires building relationships and customizing. Finally, feeding customer feedback of the finished product into the innovation pipeline and repeating the process.