To be successful in business, we cannot merely rely on our nature. There are specific rules, and processes we need to follow – in order to transform our dreams into reality. John describes such structures in this week’s lesson. Indeed, this week we will be introduced to three new concepts. These include:

1. The ‘Golden Rules of Business,’ the

2. Exchange Cycle, and the

3. Money Cycle.

Lets now explore these rules and processes; in order to grasp a better understanding of this week’s lesson.

 

There are four primary ‘golden rules’ in business. These rules are:

1. A product or service must be sold (Supplier and Manufacturer)

2. There must be a customer

3. The customer must always pay for said goods or services

4. The business, which supplies the product or service, must add value.

 

In order for a business to be successful, there is one secondary rule. This rule is:

5. Successful businesses continuously repeat said rules. This creates an ongoing cycle of continual growth and income.

 

As John indicated, these rules may seem quite obvious. However, despite their seemingly obvious nature, people often neglect these ‘minor’ details in order to conquer greater ones. Instead, they should focus on their primary source of income. As mentioned, these rules must be repeated continuously to foster increasing business/company growth. If these steps are not followed every time, there will be a lack of consistency, which may lead to customer dissatisfaction. 

 

Like everything, there is always risk when starting a new business venture. The risk is the unknown. Businesses do not necessarily know what services or goods people actually desire, they can only make an educated guess. Due to this, loss of time, energy and money are all realistic risks when entering a new venture. However, with the right tools and proper guidance, risk can definitely be decreased.

 

When beginning an entrepreneurial venture, we always encounter risk. The exchange cycle analyses several different types of exchange, in order to breakdown and predict risk. 

 

As noted, there are several different types of cost/s exchange. These include:

1. Time,

2. Energy,

3. Products, and

4. Money.

 

But what does John mean by cost or costs exchange? Well, in every business we give our time, energy, money and goods/services, in the hope that for our efforts, we will be successful in return. This is fundamentally where all risk starts; the cost of what we give to a venture can be the difference between success and failure.

 

There is also another form of exchange – pricing exchange. Similarly, it involves time, energy, money and products – but mitigates risk; rather than creating it. Indeed, the exchange cycle juggles what goes ‘in’ and ‘out’ of a business, whilst managing all the external factors (including risk), which impact the new venture and are continually circulating around it. 

 

The money cycle is arguably the most important and necessary cycle of business.  Without money, a business cannot survive. More importantly, if you are spending more money than you make – i.e. ‘bleeding money’ – your business venture will fail. 

 

The money cycle is closely linked to the exchange cycle. It relies upon the successful application of time, energy, products and money. However, it also relies upon the successful timing, and a higher knowledge of money circulation and transaction, to create wealth.  As John identified, wealth is created by the flow of money that returns to the money cycle. It needs to return to the cycle in greater volumes, than the amount of money – which left the cycle. It also needs to be of less personal and financial cost. 

 

There is a very strong correlation between, the ‘golden rules,’ exchange cycle, and money cycle’s in business. They all (to some extent) are reliant upon each other, and cannot exist without the support of the other. It must be emphasised then, that these processes and rules take time to implement, and as such will be explored over a lengthy period of time. Hence, until next then, keep on keeping on…