Barbers end up opening barbershops. Then they realise that running a barbershop has little to do with cutting hair. Rent, salaries, marketing, leadership, capital raising, motivating staff, creating distribution pipelines—all of the above have little to do with cutting hair.
Whether you run a marketing agency, a high-flying hedge fund, or sell fruits and vegetables on the side of the road, the business fundamentals are always the same. In fact, they are so simple that they are often overlooked. Founders go looking for more complicated methods, ratios and formulas when the few metrices that matter are right under their noses.
A business is an invoice that gets paid. That’s all there is to it. Of course, this is dangerously oversimplified. However, whether it’s a product or services business, this principle—an invoice that gets paid—is often overlooked. Founders raise funds using complicated financial instruments. They get involved in complex production processes that require years of experience and expensive equipment. They hire, fire, market, do equity deals, find and change suppliers… You name it.
But when the sun sets, all the noise disappears, and two questions illuminate the night sky of any business mind worth its salt. Did we issue an invoice, and did it get paid? If the answer is no to any of these two basic questions, then no matter how shiny or optimistic a business might be, something is terribly wrong.
