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The New Number 1 Rule of Business
What is the number one rule of business?
If you ask entrepreneurs this question — and I have asked many — the most common answer you will get is to make money.
This answer is not wrong, but it is also not the answer you get from textbooks and business studies. When I studied business, the general rule was that the number one rule of business was always “to increase shareholder value.”
The response I usually get next is, “Isn’t making money the same thing?”
Without a doubt, whether you are a for-profit or non-profit company, profitability should be at the center of a strategy. If your company is not making money, it will not stay in business. No oxygen, no fire.
You also need to understand who your shareholders are, which include but certainly are not limited to employees, vendors, suppliers, the community at large, banks, and even the municipalities in which you operate (taxes). All of these entities have a vested interest in your business and benefit from your business staying open and succeeding.
When you study business, however, you will learn that the most important shareholders are your investors, the group of people who have provided you with the necessary capital to start and grow your business. Many believe investors should be prioritized, and when…
