Business Expenditure
Having stated that a different perspective is required in business, it is worth risking a little confusion to point out that there are many instances of businesses not doing what, strictly, they should. (This could be because of all the people to be found working in them whose instincts are to follow domestic behaviour.) Examples are marketing and training budgets, which are typically reduced following poor trading performances. Logically, there is every reason that they should be increased, to improve performance. Marketing activity precedes the sales it generates, and training enables people to do things they could not previously do so well or at all. These expenditures should relate to the income they will generate, not what has already -and unsuccessfully – passed. It may be good housekeeping to reduce expenditure in response to reduced income, but it is not commonly good business.
Marketing and training are examples of expense items, money which is ’spent’ in the course of generating sales, and not money ‘invested’ in assets – things which a business owns and maintains in order to operate at all. In private life, the distinction is unimportant; it is our prerogative to choose to starve seated in period armchairs, or to eat lobster while reclining on bean bags. ‘Investment’ is something we may choose to do with any money we are lucky enough not to need to spend. A business, in contrast, must ‘invest’ the money it is provided with, or it will achieve nothing. It requires assets which will enable it to trade effectively in its chosen sphere. Thus, no matter how good its lobster, a restaurant is unlikely to succeed unless it also invests in chairs for customers to sit upon.
Once again, the great diversity of the business world can come up with exceptions, but these only prove the rule, as the expression goes. Yes, there are businesses for which investment in the financial sense is their actual trade; ignore these. There are also restaurants without chairs, notably in the Wall Street district of New York where there are far too many people for everyone to sit down at street level; these are not restaurants in other than a very functional, obsolete use of the term, and are better called lunch counters. It is not known whether there have ever been restaurants where the customers sat on bean bags – it may have happened in San Francisco at some point in recent history. An American text from the seventies records the story of experimental restaurants where the customers brought and cooked their own food. This concept was ‘brainstormed’ in response to the criticism that one thing people did not care for about contemporary restaurants was the lack of home-cooked food. There are no prizes for guessing how they fared.
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