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  • Denis Boucher

The metabolism of your business

Updated: Sep 7, 2022

By Denis Boucher, Ph.D.

Few people imagine that a business is a living organism. Yet, a striking similarity exists between how the human body works and a company.

To function, a body needs energy. The energy comes from the proteins, fats, and carbohydrates it consumes.

This energy allows it to accomplish a given amount of work: thinking, walking, exercising, working, etc.

When the human body works or exercises low intensity, it can meet the demand for many hours without exhaustion. But, if the power increases and exceeds a certain threshold, the body is depleted of its energy reserves. It enters a zone where the result will inevitably be exhaustion.

If you are an athlete, this zone will appear at a higher intensity than a sedentary person. This is because an athlete, through training, has increased his or her ability to use energy to produce higher intensity effort with minimal cost.

So, a human body can produce low or high-intensity work, but when it crosses its critical threshold, even if it is moved by the greatest motivation in the world, there will come a time when it will not be able to meet the demand. Exhaustion will be the final destination. This is the nature of human metabolism.

Your business also has its own metabolism. It offers a product or a service that requires energy for its realization. This energy does not come in the form of calories but in the form of an energy value called: money.

When your business brings in more money than it spends, its metabolism allows it to meet the demand without depleting its energy reserves.

If your company spends more money than it makes, it depletes its energy reserves. Then, based on the hope that things will go well in the future, the company can obtain loans and attract investors to compensate for the lack of energy (which is not available to the human body, however).

This energy input is beneficial in the short term, but the business will have to make more effort to pay back this borrowed energy. If the company spends more energy to meet this additional demand and, unfortunately, the inflow of energy (money) from the sale of its products or services does not increase sufficiently, it will reach its critical threshold.

Then, the business's efforts are only used to fight against debt, expenses, and the lack of liquidity that is eating away at the company from within. If it does not make a drastic change and remains above its critical threshold, it will systematically face the end of its existence. It will have exhausted its energy reserves. Its metabolism worked hard to compensate, but it was impossible to sustain anymore. The metabolism has decompensated, resulting in the business's death.

In economics, the debt-growth curve is similar to that of a human body progressing towards high-intensity exercise.

We can predict when a person will be totally exhausted in exercise physiology. In economics, it is possible to do the same thing with a business.

Everything in life is a matter of metabolism. Isn't it fascinating?
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