 Welcome back everyone. Today, we're going to talk about what makes a business. So what does a business actually need to survive? Okay, so first off a business needs some sort of identity. So an identity, right? What makes the business? Why how is this business different than any other business that anyone could go to? This identity is what defines the business itself, right? What area are we working in? So for example, an anime studio, right? Their identity is anime studio. They probably produce animations, right? Or some sort of movies or something like that, right? So a business usually has some sort of identity and normally some sort of business goal, business goal, right? So what does the business try to do? What's the point of the business existing? Normally a business identifies what they're trying to do at the beginning. And then from that, from understanding what the business goal is, then they try to identify customers, right? So they're customers. Who are they working for? So this is really important because a lot of businesses sometimes have customers that are actually different than the customers that they expected. So who business works? Okay, anyway, yeah, so who business works for? Customers are the driving force. If you don't have a customer, you don't really have a business because let's say you're trying to sell a product. I'm trying to sell markers to someone. Well, maybe my markers are really, really bad. So I don't have any customers. Is my business going to survive? Probably not. Because the reason my business won't survive is we have to think about what our product is. So our product. Now, most products take a certain amount of money to create. So a product takes a certain amount of money to create, and that's our cost. So whenever we produce a product, that's our cost. Let's say even I'm making a mandu. Well, I have to buy the ingredients to actually make the mandu, and then I have to take the time to put the mandu together, and then I have to cook it. And that means heat, that means gas. So I have a lot of actually costs associated with making the product. Now all of those costs add up. So let's say that heat was 101. The time is usually the biggest expense. So the time that the person takes to make the mandu is maybe 201. Right? And then the ingredients. Ingredients is maybe 101 for one mandu. Okay? So here my total costs are 401 per mandu. Per mandu. So how much should I sell the mandu for? One mandu. Well, it better be more than 401, because if it takes 401 to buy, to create one mandu, and I sell it for 301 to my customers, then I'm actually losing money by doing business. Okay? Now it's good for the customers, but really bad for the business. Sometimes you might want to do that, for example, to get people to taste your mandu so they buy more of them later, whenever they're at the normal price. But if I sell a bunch of mandu for 300, but it costs me 400 to make, my business isn't going to last very long. Okay? So we have a product, and that product usually has, always has an associated cost, including time. Time is a cost. Right? So how much is your time worth? How much is the time worth of the person who makes the mandu? Well, if they get a salary, and they probably, hopefully they get a salary if they're working, right? If they get a salary, then their time is worth something. And we can calculate how much that time is worth or how much they're getting per hour. Now, what are customers willing to pay? Well, if everyone thinks that my mandu is really good, it tastes really good, or if there's no other option, so I'm the only store that sells mandu and I'm the only place that people can eat, then people are willing to pay a little bit more because either I'm a monopoly or I'm delicious, right? Or they think I'm delicious. So in that case, if people have a good impression of me, I can maybe sell some mandu for, you know, $4,000, maybe $5,000 won, right? If they think that they have a lot of different options and there's a lot of competition, or maybe there's a reputation that my mandu just isn't very good, then they're not probably willing to pay that much for mandu because I'm guessing whenever I said $4,000, $5,000, a lot of people went, for mandu, that's too expensive, right? Even if it was, you know, six or seven, maybe it's still too expensive. But imagine that each mandu you're selling for $500 won, okay? Well, if your cost is $400 won and we're selling each mandu for $500 won, you're still making money. You're not making a lot of money, but maybe you're making enough to sustain your business possibly, depending on how many mandu you sell, okay? So how businesses work, basically, is we have some sort of identity or business goals, right? What is the business going to do, okay? Then we have customers. Who are our customers? Who could be our customers? Who are we currently serving, or who are we not currently serving that we could serve in the future? And basically, we identify who does our business work for, work for, okay? And then what is our product or products at, you know, Kimbap places, they have a lot of different types of food. They don't just have Kimbap in most places. They have many different things, Lamyun, tteokbokki, things like that. So what are our products? Are our customers willing to buy all of the products? Are they more likely to come to us if they know we have many products or one product, right? So we have to think about what our product is that we're actually providing to customers and how much are customers willing to pay? Now, very, very, very basically, the goal for business is to make sure that our costs are less than our revenue, right? So basically, the amount of money that it costs to provide the service is less than what we're charging for the service. So if people are paying more than what it costs us to make something, then we're actually making money. And that is called profit, right? So businesses, for the most part, or at least right now we can say, businesses want to make a profit, okay, which means that they try usually to reduce their costs and increase their revenue normally. And then that hopefully increases profit. Now, there's a lot of ways to do that. Costs involve a lot of things like employee salary, lights, water, heat, even the chairs that you would put in a restaurant, for example. All of those have associated costs because what happens if a chair breaks? Well, it costs the restaurant money to put a new chair in place, right? So all of those things are different costs and costs add up very quickly. The revenue, however, should hopefully increase over time or at least you should be generating enough revenue to stay in business. That can mean a lot of things. Some businesses don't want to make a lot of revenue, they just want to basically maintain a salary for their employees. They don't need to increase profit over time, although that would help them out. Some businesses are very profit driven. So they want to do everything they can to increase profit. Now, we'll talk later about how you can increase profit. But basically, this is essentially how most businesses work, right? They have some sort of identity, what they're trying to do. They have business goals defined. They identified who their customers are or who their customers could be, who could they reach out to. And then they have some sort of product. Now, a product could be a service, it could be an object. So for example, someone sells markers, someone sells whiteboards, right? It's probably a different company, but they still have products. A service could be something like a waitress or a waiter, right? They clean tables, they take orders, they're providing a service to the customer and they get paid for that service through hopefully a salary. So what is it, what a product are they actually providing? Now, this is basically, very basically how businesses work at a fundamental level. What we're going to talk about is how do businesses use IT or how does IT actually change this or change the way that this model can work. So that's what we'll talk about next.