Saturday, July 29, 2006

Bankism vs capitalism

Above is a neat diagram I created for my clients to help them understand what business is all about.

The green boxes represent "money" and the blue boxes represent "capital" (that is, money that has been converted into a money-producing instrument or tool).

In this case, the capital happens to be business cards. The 5 navy blue boxes on the right represent the business cards that actually produced results (sales of $10, $20 or $50).

The initial investment of $50 to print 1,000 business cards, yielded total revenues of $150. That's a return on investment (ROI) of 200%.

If you don't understand how business is played, then your surest bet is to put your money into the bank (bankism).

But once you understand how business is played, you can become a capitalist-entrepreneur and manage your business until you get a ROI that is as high as it can be.