We often ask ourselves what principles we should base our business on. To do this, we familiarize ourselves with numerous business models, examples of famous companies, and modern business literature on the topic of management.
The goal is the same: to create a successful business. The understanding of success is different. For some, it is measured by the abundance of income , for others by the creation of social welfare, and for others, business success is associated with self-realization.
Whatever the motive for doing business, we cannot move forward if we do not build it on the right principles. When thinking about the right principles, I think not of the authors of modern business bestsellers, but of the great Georgian thinker Ilia's Five Bags from the Widow of Otara.
“Whether [the widow of Othara] sold wine or bread, she divided the money into five parts and kept it in five rows. For this purpose she had colorful bags made of cloth, sewn together like a purse.
– He called one of these bags "the bag of necessities" and kept supplies in it for harvesting, transporting, and threshing bread and barley.
– He called the second purse “Barakala purse.” In it he kept supplies for working in the vineyard.
– The third purse was called “Sajanabo.” In it he kept postal money and change, in case the village of Vinnitsoba ever registered.
– In the fourth pocket he kept the tax collector's tax money. He called this pocket: "Give it and it will be given to you."
– In the fifth pocket, she had money for household expenses and for giving to the poor. The widow who kept this fifth pocket sometimes called “Farsigha’s caravan,” and sometimes “Shio’s cellar.”
Ilia surprisingly succinctly outlines a model for managing a family budget. But if we delve deeper, we can ideally adapt this model to business management. First of all, it teaches us the need for planning and saving , which is of crucial importance in business. It doesn’t matter how modest our company’s income is, it doesn’t matter whether we keep money in our pocket or on a deposit. It is necessary to get used to making savings, for example, in the form of reserves or at least by deferring depreciation. The pandemic showed us the need for reserves , when many companies were left without income, but still had to incur expenses. Many business owners are busy using profits for personal purposes, and not saving reserve funds, which often insures the company from fatal consequences.
We can also avoid many problems by timely planning. If we calculate our expected expenses and income based on a preliminary realistic analysis, we will be able to mobilize funds purposefully for upcoming or ongoing projects. Just as the widow of Otara had set aside, on the one hand, a “hardship” spending amount for ongoing daily activities and, on the other hand, money for expected work on the vineyard.
Many start-up businesses, especially in the early stages of their formation, try to avoid paying taxes. The state has been tolerant of small family-run businesses for some time, but in the long run, paying taxes is an integral part of our honest business. This is exactly what the widow's tax bill served.
Payroll costs are particularly noteworthy. Here, Ilia emphasizes the responsibility of providing well-deserved wages to hired workers. The company's manager is obliged to take care of creating fair working conditions for employees, which is often reflected in appropriate remuneration for labor. Unfortunately, in Georgian business reality, we often encounter the use of hired labor resources for minimal wages, which discourages employees from working. Especially when the managers themselves earn disproportionately more.
And finally, Ilia hasn't forgotten what in modern business parlance is called corporate social responsibility ( CSR ) – that is, money spent from one's own pocket for good deeds and helping others. A company that generates revenue should consider itself obligated to take care of solving various social or public problems within its capabilities.
If we summarize Ilia's five-pocket model, we get five principle formulas for business success:
1. Smart planning
2. Targeted savings
3. Taking on obligations to the state
4. Taking responsibility for employees
5. Charity
This formula can guide us on the path to business success, no matter what our motivation is for achieving success. If our starting point is to get the maximum financial benefit from the business , we will achieve this through proper planning, targeted spending of financial resources, avoiding penalties by covering tax obligations, paying adequate wages to the employed workforce, because a motivated employee brings more benefits and income to the company than an unsatisfied one, and finally, by sharing social responsibility, gaining the goodwill and loyalty of society and, accordingly, the customer, which will positively affect the sales of our products or services and the growth of income.
If our goal is to create public welfare, here too the best way is to act according to the principle of Ilia's Five Kisses. With proper planning and proper spending, we will create a safe, guaranteed working environment for the employees for whom we have taken responsibility and we will be proud of even a small contribution that we make to the well-being of their families.
And if we need a business for self-realization , then we are obliged to prove to ourselves that we can manage it, and this is impossible without planning, rational management of finances, legal actions and conscientious treatment of personnel. It is not for nothing that the fourth pocket was called “Give and it will be given to you”, what we give for the benefit of employees, even for their development and retraining, will come back to us doubly in the form of motivated and grateful work from them. And there is nothing more a person needs for self-realization than the feeling of inner satisfaction and joy caused by helping others.
So, join BPN Georgia's Business Administration Seminar and learn how to build a business on sound industrial, legal, and ethical principles.
