Succeeding in planning, starting and managing a business is all totally dependent on the achieving of a single result. Unless this result is communicated to, accepted by and provided to the customer, the business will fail. The failure will be in the funding and managing of the business, not necessarily in the idea. The failure will be in the funding and management of the business.
That which must be communicated, accepted and provided is value. The entire justification for a business to exist is that it creates and delivers value to the customer. There is no other single factor required for business success.
The business owner’s background, intent, skill, funding, staffing, etc. are not going to result in success, unless there is value provided the customer. If the amount paid by the customer is more than the businesses’ cost of providing the value, a profit will have been created and the business will succeed.
Customer value can be that which increases the customer’s revenues or reduces the customer’s cost of selling a product or service to their customers. In some cases, the value of that provided will be a large percentage of the value the customer provides in distributing the businesses’ product or service, and in other cases only a small part of the customer’s offering.
In communicating the value of that being offered by the business both the timing and magnitude of the benefit mut be understood and accepted by the customer. Therefore, the business owner must understand the dynamics of the customer’s business.
The pricing of the value being offered must relate to the customer’s pricing of their products or services as being offered. Of course, to ensure profitability the pricing by the business owner must include the expenses of administrative, production and marketing of the product of service being offered.
Businesses which succeed are those on which the customer becomes dependent. In effect, the business
Arthur Lipper, Chairman
British Far East Holdings Ltd.
+1 858 793 7100
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