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What Is Your Definition Of A Business?

by origin
18 replies
Rich Dad Poor Dad defines a business roughly like this (paraphrasing):

"A business is something that allows you to go away for a year, and when you come back there is more money in the cash register than when you left and the business has grown in value".

I think I agree with him. What is your definition of a business?
#business #definition
  • Profile picture of the author kilgore
    Originally Posted by origin View Post

    "A business is something that allows you to go away for a year, and when you come back there is more money in the cash register than when you left and the business has grown in value".
    That's the definition of an investment, not a business. Sorry, but I don't know of any businesses that just run themselves. If you're successful (and it's something you aspire to), it's certainly possible to transition a business into an investment -- that is to say that you make enough money so that you can hire other people to do all the work of running the business. But if you just "walk away from the cash register", I doubt very much that there will be much more money in it when you return.

    For me a business is simply an organization created to create and exchange value. More interesting to me is Steve Blank's definition of a startup: "an organization formed to search for a repeatable and scalable business model."
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    • Profile picture of the author origin
      Originally Posted by kilgore View Post

      That's the definition of an investment, not a business.
      I hear you, yet such businesses exist. Many do in fact. It is a matter of setting up the correct system and streamline it so it does not need your input anymore....
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      • Profile picture of the author kilgore
        Originally Posted by origin View Post

        I hear you, yet such businesses exist. Many do in fact. It is a matter of setting up the correct system and streamline it so it does not need your input anymore....
        Just because you want those businesses to exist doesn't mean that they actually do.

        That said, I suppose you could do something like create a production company that creates a movie and then just collects royalties from it -- assuming you're good (and lucky) enough to have a hit that stands the test of time.

        But those are absolutely the exception -- and aside from a royalties-based business model, I certainly can't think of any businesses that "you just set up and streamline" and then watch the money roll in indefinitely. If that were true, bigger, smarter, better funded companies like Google, Microsoft, and Amazon would be creating batches and batches of these "systems" to collect the hordes of free money that you seem to think exist. Instead they're constantly innovating, constantly creating new products, constantly marketing -- because they know that if they didn't their competitors would beat them and beat them quickly. Ever hear of Blackberry? As recently as 2007 they were the market leader (by far) in the smart phone industry...
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        • Profile picture of the author origin
          Originally Posted by kilgore View Post

          But those are absolutely the exception -- and aside from a royalties-based business model .....
          Cool! Yes, that is one! I believe Elvis makes more money today than when he was alive.

          Originally Posted by kilgore View Post

          .... bigger, smarter, better funded companies like Google, Microsoft, and Amazon would be creating batches and batches of these "systems" to collect the hordes of free money ...
          And Serge and Bill and Jeff have to clock in every day.... They cannot take a year off and come back and find their business has grown and has more cash in than when they left?
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  • Profile picture of the author PLR365
    Originally Posted by origin View Post

    Rich Dad Poor Dad defines a business roughly like this (paraphrasing):

    "A business is something that allows you to go away for a year, and when you come back there is more money in the cash register than when you left and the business has grown in value".

    I think I agree with him. What is your definition of a business?

    A great business is a product or service in high demand with an owner who can supply the demand. Whether there is more money in the cash register than when you left and the business has grown in value a year later, is another matter. Assuming the business is successful, that will depend on how you manage your finances, or how others manage it for you.
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  • Profile picture of the author Victor Edson
    Selling a product or service. I keep it simple.

    I definitely like his definition though ... it shows the difference between owning a business and being self employed. If you walk away from your business, it shouldn't fall apart. No matter what product or service you're selling.
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    • Profile picture of the author origin
      Originally Posted by Victor Edson View Post

      I definitely like his definition though ... it shows the difference between owning a business and being self employed. If you walk away from your business, it shouldn't fall apart. No matter what product or service you're selling.
      You said it Victor! There is a difference between owning a business vs being self employed. I know for some it may come down to semantics, but the ideal is to own a business vs being self employed and it is important to know the difference.

      Too many people who are self employed think they own a business. But a business is something else as per Rich Dad's definition.
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  • Profile picture of the author Steve B
    Originally Posted by origin View Post

    "A business is something that allows you to go away for a year, and when you come back there is more money in the cash register than when you left and the business has grown in value".
    If you believe that, I've got some prime desert property I'd like to show you. That definition is utterly ridiculous.

    Think about it. If this really was the definition of "a business" there would be no such thing as a failed business, a bankrupt business, an unprofitable business, or a business that lost money during the year.

    If you think that's the case, you're in for a rude awakening! Most businesses started are not successful.

    Steve
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  • Profile picture of the author origin
    Hi Steve!

    It is not my definition, it is Robert Kyosaki's from Rich Dad Poor Dad fame. I happen to agree with him yes and there are many businesses like this. I can name several of my head that conforms to this definition.

    Did they all start out that way? Nope. They all started out as "self employed" type business until the systems were in place where they could run on their own and the owner could go away and the business ran itself.
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    • Profile picture of the author Steve B
      I understand that it's not your definition. But you said "I think I agree with him."

      The definition he gave says a business ends up with more money at the end of the year than it starts with and grows in value.

      Under that definition there is only room for a profitable business. I say, that's baloney!

      Steve
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      • Profile picture of the author origin
        Originally Posted by Steve B View Post

        Under that definition there is only room for a profitable business. I say, that's baloney!
        Isn't business in general intended to work for profit?

        I am not saying if you are self employed that you cannot make a profit, or that being self employed is a bad thing.

        Almost all businesses started out as "self employed" but progressed to a "business" after the owner set the systems in place.

        Bet you the Google guys started out as self employed in their garage but progressed to a BUSINESS.

        Technically they are investors today as the company is public. But until facebook went public a short while ago, I am pretty sure Mark Zuckerberg being "owner" could take the year of and have a bigger and better facebook when he came back. Or was he the only one driving the innovation there? He had to open the office doors every morning or nothing would happen?

        Heck and he also started out "self employed" but he is not anymore...
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  • Profile picture of the author Luke Dennison
    Anything that makes money without you having to be there.
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  • Profile picture of the author Randall Magwood
    Business: Something that allows me to wake up everyday with all 7 of my chakra points align. Having a good day everyday - even on a bad day. No more money worries... just chill forever. Fund my own retirement.
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  • Profile picture of the author Jan Brzeski
    A business... hmm.

    I'd say: A business is an individual or a group of like-minded people working towards a goal, which can be either solving other peoples problems and desires via providing services or tangible items.

    Because that's really what ANY business is about... solving other peoples problems & desires!

    You can make money in two ways (legally):

    1. Sell your time and get money (working for someone).

    2. Add value to the market/world and get money in return.

    My 2 cents.

    Cheers!
    Jan B
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  • Profile picture of the author Victor Edson
    Not every business is a successful business, many go under and fail.

    But hire a guy, pay him on percentage and put him in charge of your company growth... the more growth the more he makes.

    If he sucks.. fire him and find a new one. Now what? Does your business grow every year while he manages the growth or do you fire the new guy and find a better one?

    Either way, once you've built a business to be self sustaining, at that point is it an actual business you can work on and improve instead of working in and being tied to. That's what I learned from working on your business and not in it.

    Add to that, replace yourself and it's easier to see how you can build a business to be self sustaining.

    Most entrepreneurs enjoy their companies and worry over every little detail to be this financially free, but do you really think Mark Cuban is walking into the office of every business he owns tomorrow morning so he can make sure things are being done?

    No way, he's built his businesses to work with out his every need.

    People are starving for jobs and talent is around every corner. I'm with the Rich Dad on this one. Build your business to grow, not struggle.

    That doesn't mean now everyone who reads the book is going to understand what it means or how it applies to them. No magic fairy dust was waved around, just good business advice.
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    • Profile picture of the author origin
      Originally Posted by Victor Edson View Post

      Not every business is a successful business, many go under and fail.

      But hire a guy, pay him on percentage and put him in charge of your company growth... the more growth the more he makes.

      If he sucks.. fire him and find a new one. Now what? Does your business grow every year while he manages the growth or do you fire the new guy and find a better one?

      Either way, once you've built a business to be self sustaining, at that point is it an actual business you can work on and improve instead of working in and being tied to. That's what I learned from working on your business and not in it.

      Add to that, replace yourself and it's easier to see how you can build a business to be self sustaining.

      Most entrepreneurs enjoy their companies and worry over every little detail to be this financially free, but do you really think Mark Cuban is walking into the office of every business he owns tomorrow morning so he can make sure things are being done?

      No way, he's built his businesses to work with out his every need.

      People are starving for jobs and talent is around every corner. I'm with the Rich Dad on this one. Build your business to grow, not struggle.

      That doesn't mean now everyone who reads the book is going to understand what it means or how it applies to them. No magic fairy dust was waved around, just good business advice.
      Exactly!

      See, here is my take. Henry Ford died 40 years ago. You reckon if he by some miracle came back to life today, will he find more ford dealerships around than when he was alive? You reckon ford makes more money today than when he was alive?

      Sure, he started out self employed, but he is gone 40 years and yet ford runs without him. Now THAT is a business that I aspire to...
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  • Profile picture of the author cyberzolo
    An executed idea that makes money and you are your own boss.
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  • Profile picture of the author dgclark
    In most "real" businesses both the buyer and the seller receive a positive value from an actual transaction of what each defines as valuable.

    If you have a real business that is producing true and timely value and you left for a year

    -- it would be in a shambles when you returned.

    The "autopilot" will have navigated you downward or at least stalled any progress and you will be far behind your competitors.
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