Basics of doing business. What a new entrepreneur needs to know

In this article we will look at the basics of running a business, such as profit, customers, resources and production organization. Consider the importance of human connections in the modern business world, connecting a company with customers, employees and suppliers.

Learn how the most innovative companies use cross-functional teams that include not only traditional business functions such as finance, marketing, accounting and manufacturing, but also designers and engineers. Additionally, we will discuss the importance of data in the modern business world. After reading this material, you will learn what makes bad companies bad and good companies good, and how to make your company interesting, innovative and profitable.

Fundamentals of modern business

When we think about business, business culture, or business goals, we think about money, profit, power, or competition. Of course, these things are directly part of the basics of running a business, but that should not be the goal. The main goal of the business is to create useful things for our customers. This also includes meeting the needs of our employees and our business partners. But make no mistake. Business, of course, is about making money, but you can’t make that money without customers, employees and business partners. If you need to earn money for starting your business – try online slots nz. 

To be successful in business, you need to understand people. What do clients want? How do they want to get it? How can I get more results from my employees? You must understand the infrastructure: favorable location of buildings, accessibility of roads, Internet, legal system. You must understand resources, materials, raw materials, energy. Speaking of energy, you can use comparison sites like texas choice electric to compare energy providers and find the one that offers the best rates. You need quality resources at a good price.

Now let’s list the important areas in the intangible sphere. To succeed in business, you need to know what happened yesterday, what’s happening now, and how you can use data, information, and knowledge to make better decisions tomorrow. Finance, accounting, sales and marketing, supply chain management, human resources, information technology – all this will help you understand the essence of money and the value of cooperation with people. Understanding money, people, information, resources and infrastructure, as well as knowing how to create a useful product or service, are the core fundamentals of running a business and will allow you to start running your own company.

Every business is created to make a profit, but most companies can go years without it. But how can a company that cannot make a profit stay in business? To try to answer this question, you must first understand the basics of profit.

Profit is the amount of money left after a company has paid all its bills. That is, revenue minus costs equals profit. It looks simple, but in reality it is not. This simple formula has many nuances. But we will not dwell in great detail on the theoretical part, but will briefly consider two variables of our formula:

Revenue (income) is the amount of money a company receives from its customers for its goods or services;

Costs are the sum of all the company’s expenses to produce a product or create a service.

Every company tries its best to tip this balance in the direction of income in order to make a profit. It could be:

• tough competition to increase sales;
• Tight cost controls, such as cutting wages or using lower-quality materials, can alienate customers.
• increasing production space, opening a branch, increasing inventories or training employees.

Making money, being profitable, is what business does. These are important decisions that business leaders face every day.

Any business planning begins with identifying an idea, where, in turn, the value of the idea lies in the resources you have. It could be:

• your knowledge, skills and experience;
• excellent relationships with clients and suppliers;
• connections with smart and influential people;
• industrial building, minibus or other material resources.

In business, knowing your resources is vital to understanding what you have and what you need. What makes you special or sets your company apart from your competitors? What will you use to develop new products or attract new customers?

Knowing your resources is also very important when presenting your company to potential investors. Of course, a good idea may be attractive to a future investor, but without the accompanying resources it has no value.

Defining your product or service

Perhaps you already produce or have decided to produce a core product or service. But every business needs to create a range of products or services in order to become profitable as a business.

Make sure you consider your company’s strengths and weaknesses and listen to your employees. They can see mistakes at various stages of business that you are unable to account for, as well as open you up to opportunities that you would never have known about.

Western companies usually create cross-functional teams to search for new products or services. Such teams are created from leaders of all departments in the company, who are able to review the entire production process, logistics and sales. Most often, two or three such teams are created to search for different ideas for a new range.

If your company is looking for new products or services, make sure that development teams are given specific instructions that cover design, finance, marketing, engineering and supply chain issues.

When you think about a new product, consider its variability. Many product options can:

• expand the sales market;
• help compete with other manufacturers;
• extract additional profit from the rarity or individuality of the product, etc.

On the other hand, the limited variety of the product contributes to:

• reducing costs through bulk purchases of raw materials or parts;
• reducing costs for storing the product and placing it on the sales floor.
• As your company develops new products and services, consider all possible options. Which options will the customer value most? Is the client willing to pay more for individuality? Will you increase your market size with multiple product types? Will offering such an option be profitable? What kind of future product are customers willing to accept as standard? Standard types of product are easy to mass produce.

The information in this material will help you understand the connections within the company between marketing, finance, design and everything else, as well as the connections between the company and its suppliers and, of course, the company and its customers. Becoming a true business professional does not mean being an expert in every field. It’s about seeing how every little piece of the business plays an important role in delivering value to its customers.