The Four Categories Every Business Needs to Succeed.

Posted by | June 11, 2018 | Accounting, Entrepreneurship | No Comments

When you start a business, your focus isn’t always on the big picture.

Believe it or not, this is a good thing. What matters more than anything else for the success of a business is value

If you provide a service that is valuable enough that people will pay for it, then you have a positive value exchange and a chance to succeed.

Without a positive value exchange, all the great marketing, sales, and business systems will get you nowhere.

At Kahuna, we work with businesses of all types, but this core piece is the same. Those who make money are those who provide enough value to get paid.

After the value exchange

But once that value exchange is established, the work has only begun. Simply having a valuable product or service will not create a viable business.

What if no one has ever heard of it?

And then how do you organize yourself once people hear about it and want more? How do you create systems to maximize time?

This is where many business owners get stuck. They nail the value exchange, then through word of mouth start to grow, but have no way to keep up or get their head above water.

Breaking down business

Kahuna Accounting is one part of a larger whole that helps entrepreneurs take control of their business, focus on their core value exchange, and look into the future.

So to make it simple, we’ve broken business down into four key areas. These are not four areas that are next to each other on an equal level, but more of a progression. You figure one out, then move to the next until all four work together harmoniously.

Every business, from law firms to construction to accounting lives within these four categories.

1. Operations and logistics

Operations and logistics are the least specific of the four main categories of business but essentially revolves around you, the business owner.

This is where you create the idea of a business and find a way to deliver it to a customer. This is where the value exchange is discovered and created.

Operations and logistics is the leadership and vision for your business. It’s where you get some help to determine what the goal is. It’s where you ask why? Why do I want this and where do I see this going?

It’s also some of the fine, but overarching details that must be ironed out. It’s the entity structure, and the bare essentials of technology and equipment to get started.

Most of all, it’s where you validate an idea that can be turned into a business. If you do, you can get started, and move to the next category.

2. Marketing and sales

Once you have validated you have an idea people are willing to pay for, your next step is to get people to actually pay for it.

That’s where marketing and sales come in. Many people determine they have a business idea and immediately jump into a need for business systems, capital, office space, and a bunch of other cool, but distracting items.

The reality is, your job as a business owner is to get your message in front of people and get sales.

This is not only true of startups but businesses that have been around for ages. If you ask people what their biggest frustration or challenge is, you most often hear that they want more customers.

This is not easy, and having a great value exchange does not guarantee you’ll be able to reach people with your message.

Marketing and sales require hustle, communication skills, persistence, and a willingness to be vulnerable enough to expose yourself and be rejected.

Rather than worrying about the business systems, hiring, and how to scale, the first priority needs to be to keep finding more people to serve. The more you do, the more you’ll learn about your value exchange and once you have more business than you can handle, that’s when you worry about how to scale.

3. Accounting and Finance

When you start making money, that’s when you need to start accounting for that money. Not only because you legally have to file taxes, but because the right bookkeeping can help you look ahead to the future, rather than just react to what has happened.

This concept is exactly how Kahuna Accounting came to be.

Many people overlook this because they are so focused on the first two categories, Operations and Marketing.

Ironically, good bookkeeping should allow you to do exactly that.

In a business, there is nothing more important than having a great value exchange to make customers happy and finding more customers to serve and make happy.

If you are a landscaper, you need to be worrying about doing great landscaping work and finding more landscaping work.

If you are an attorney, you need to be a great attorney and find more clients to serve.

To do that, you need to have bookkeeping help that you can trust to show you the numbers and viability of your business. As a business owner, you should have reports delivered to you to show the financial picture in real time for what is happening with your business.

Without that, it’s just aimless work with no direction.

4. Capital

Finally, the fourth category which weaves through the rest is capital. When you have the cash flow, and the projections for growth, this is when you can look at financing and preparing the business for the long term.

The excitement of Silicon Valley can sometimes confuse us into thinking capital is the place to start. Instead of taking the path we’ve laid out in this blog post, most businesses think capital is the solution to all problems.

You start with an idea, then get capital, then find out if it works. This is backward and takes a major risk.

Your value exchange, leadership, and character are what makes a business successful.

Then it’s up to you to create systems for marketing/sales and accounting/finance to ensure the continued sustainability of a long-term business.

Once you have that in place, capital can be the lifeblood of the business providing multiplication to all your efforts.

So what is the application?

Admittedly these descriptions are pretty broad. Within each of these four categories, there are hundreds of little details to be considered and handled.

So what can you as a business owner do with the understanding of breaking business into four broad categories?

First of all, spend your time finding a way to focus on tipping the scales of your value exchange and finding more people to serve.

Are you able to do that in your business?

If you are distracted by 100 different things and are spending little time driving revenue, it’s time to re-think priorities.

If you have plenty of business, but don’t know where you stand or how to create a free minute, then it is probably time to look at getting help with bookkeeping to allow you to have a big picture view of your business.

Ultimately, breaking down your business into categories should be a way to simplify. There are hundreds of things you can be doing each day, but only a few of them really matter.

Interested in learning more about how Kahuna Accounting can help you look forward with your finances? Schedule a strategy call with Kahuna Accounting and we can discuss best practices for bookkeeping, profit, and growth!

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