How does a Business Work 101

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hi we're from the innovation hub in

Pretoria we are a science park that

promotes economic development through

the growth of innovative businesses

let's have a look at how a business

works to start with what is a business

do let me explain

your business makes and sells things

that customers need customers pay you

for this with money you already knew

that okay your business also has to make

a profit what your customers pay you

must be more than what you spend then

you are making a profit and you will

also have a sustainable business that

will stand the test of time

on the other hand if you spend more

money than you earn you are losing money

and will go bankrupt what is a business

a commercial business such as a shop or

factory has to make a decent profit but

a community project can also work as a

business in this way you were always

sure that your project income is higher

than your expenses and your community

project will also be sustainable over

time there are three main stakeholders

in any business owners who can be known

as shareholders managers

and workers owners managers and workers

have to work together for the business

to succeed remember a happy business

means happy customers your business can

have more than one owner and it's common

to have many more workers now we know

that your business has owners managers

and workers let's have a look at the

role each has to play what your owners

have to do owners have to find money to

start up the business and they also need

to buy new equipment when it's needed

owners also create a plan to make sure

that the business will work sometimes

there can be many owners which can make

it hard to agree on an enemy this is why

owners sometimes appoint a management

board to manage the business the rest of

the owners will still be watching to

make sure things go well so far so good

what does a manager do a manager decides

what needs to be done each day they also

decide who should carry out each task

they have to check on performance and

quality managers also need to plan

because when they don't things can go

they get wrong let's have a look at what

workers do workers do all the jobs that

need to be done to make something to

sell there are other workers to sales

people need to find buyers to sell them

accountants keep track of the money to

see if you're making a profit or not and

so on everybody also needs to get paid

for their work workers are usually paid

wages at the end of each week managers

are usually paid a salary at the end of

each month owners are paid a dividend

which comes out of profits at the end of

the year or in this case with a farm

after the harvest has been sold dividend

payments are guaranteed your business

has to make a profit first can an owner

also be paid a wage as well yes they can

if they also work as a worker or manager

then they should be paid away are there

any risks in running a business of

course there are owners may have to find

new funds if the business starts to lose

money the owners may also lose

everything they own if the business goes

bankrupt a manager can be fired if the

business doesn't meet its targets

workers also risk losing their job if

the business closes yes workers also

risking injured if they don't work

safely oh ah three reasons why everyone

should work towards the same end goal

your products will be of a better

quality which means you can sell more

and at a higher price to higher prices

mean more income to the business which

in turn means higher dividends and

higher wages three happier customers

will always come back to buy more

remember it costs ten times more to find

a new customer than it does to keep an

existing one happy so let's do a quick

recap of what we've learned your

business has to have something to sell

customers buy from you using money your

business has to make a reasonable profit

otherwise it can go bankrupt if you want

your community project to be sustainable

then run it like a business there are

three main stakeholders in your business

owners who are paid dividends from

profits managers and workers who are

paid a wage or salary it's important to

work together as a team to build your

business as well as a happy customer

base and don't forget customers are also

very important stakeholders without

customers you have no business