I have already used the word "resources" more often than the word" profit." It is time for these resources to step up and identify themselves.
Whenever an individual starts a business, the end product or service will require a mix of four basic resources or factors of production. I like to refer to them as the four horsemen of production.
The first resource is land and the payment that is made to bring land into the productive process is called rent. The second resource is capital, and the payment that is made to bring capital into the productive process is called interest. The third resource is labor-time, and the payment that is made to bring labor-time into the productive process is called wages. The fourth resource is the entrepreneurial and creative skills of people, and the payment that is made to bring these skills into the productive process is called profit.
For those of us who like our life less complicated, there is another definition. Anything used in the production of goods and services is a resource.
Whenever an individual starts a business, the end product or service will require a mix of four basic resources or factors of production. I like to refer to them as the four horsemen of production.
The first resource is land and the payment that is made to bring land into the productive process is called rent. The second resource is capital, and the payment that is made to bring capital into the productive process is called interest. The third resource is labor-time, and the payment that is made to bring labor-time into the productive process is called wages. The fourth resource is the entrepreneurial and creative skills of people, and the payment that is made to bring these skills into the productive process is called profit.
For those of us who like our life less complicated, there is another definition. Anything used in the production of goods and services is a resource.
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