The Magic Bike Company

The Business

This is a simple story to illustrate how a business can be formed and create substainable profits.

Definition of business

Innovation is not just about making products that will deliver value to customers. It is also about ensuring that we can deliver that value in a sustainable way. You cannot sell products at a loss and then make it up in volume. Sustainable traction means that our products pay for their own existence. As such, we have to ensure that customers are willing to pay sufficient amounts to cover the cost of value creation and delivery. We need to find a price point that will cover the cost of customer acquisition and retention. And we need profit. Profits are how we will pay our own bills and sustain the company. A business is a organization or economic system where goods and services are exchanged for one another or for money. The key is the exchange of money.
What follows is a short example of a creation of a small company.
Pottery process
Ali's grandfather was a builder. On his off days, he made pottery that he gave to his friends. Ali like visiting him and liked helping out at the studio. Ali was brilliant and got a scholarship to study at the University of Cambridge and the Isacc Newton Institute. He was interested in the mathematical design of new materials. In his free time, he enjoyed visiting the ceramic studio where he worked on creating pots similar to those made by his Grandfather.
Taos store
One day when Ali was working in the studio, a young lady came by and asked a lot of questions. Mary was singing to pay for her food and rent. She was from Taos New Mexico and was an American Indian. Her family had a small store where they sold Indian jewelry and pottery. Ali and Mary became best friends, and at Christmas, he visited Taos. He never left. He loved working in the studio and begin displaying his pottery.
Pottery process
Visitors from all over the world visited the shop, and Ali's pottery was popular. So popular that he created his own brand "GrandPa's Fine Works" and he began shipping to customers around the world. Mary's parents encouraged him to purchase their studio and to form a Limited Liability company. Sales were strong, and Ali and wife Mary were doing well. Mary's parents encouraged them to grow. One day an executive from the prestigious company 'Pottery Barn' visited the studio expressed interested in working with them.
They sought advice from an accountant who helped them organize as a corporation. And he recommended they get a business account at Chase Bank, expand the studio adding a loading dock, hiring a dock worker and develop a relationship with a logistics firm. Soon they outgrew the studio and rented a warehouse north of town.
Semi on the road to Taos
Business boomed. Revenue was over $750,000 a year, and profits were over $250,000. The pottery business was so good that Grandpa moved to New Mexico to help take care of the Grand kids.