Cost Centres vs Income Generators

I think one of the best business tools of all times is a game called – Age of Empires. In the game you start off with workers. The whole point of the game is to build up an empire and use your army to take over and conquer other empires, armies and territories. 

The main idea is that you started off with workers- you can apply these workers to building, cultivating and growing things as well as getting resources or applying their skills to building your army.

One of the things that I learnt first and foremost from this game is that to have a sustainable empire you have to get them into income generating areas. In the game you would have to get them farming, mining gold and stone, and as fast as you started making resources you could apply them to building infrastructure and spending the money that you were currently making.

I think too many entrepreneurial organisations don’t get the fundamentals of this principle. Firstly, they start spending money before they are making money. They believe that they have to put huge infrastructures in place, obligated to have fancy offices, and that they have to bring in a variety of heavy management before they have even got their principles of their sales correct.

The best businesses start employing sales people first, understanding and selling the product, as well as adapting their sales strategy based on what the market is looking for. Once you start generating that income you can start spending on infrastructure – your income generators must exist before you cost centres.

Start off making money before spending it.