WHAT IS BUSINESS?
Organization of an entity in commercial, industrial or professional activities is called business. The term “business” is referred to the organized efforts and activities of individuals to produce and sell goods as well as services for profit. There are 2 types of businesses, 1 is the profit-based entities which run for the primary motive of making profits, where as non-profit organizations are operated for charitable missions or rather a social cause. Business entrepreneurs decide whether to run a sole proprietorship or aim for an international corporation.
HOW DOES A BUSINESS BEGIN?
A business is begun by keeping in mind the product or service which will be offered. A business concept and a name are the key ingredients. Research shall be done depending on the nature of the business to find out if the business is feasible and if the business can deliver value to the customer. Once the entrepreneur is clear about the business plan, name, objective, goal and financials, he/she shall bind all the information and convert it into a formal document.
An entrepreneur shall always be thorough about the minimum capital required to begin a business, and thus he/she can either invest their own money for orientation of the business. The businessman can also raise capital through financial, authorized, legalized lenders. The formal document will play an important role while asking for loans through financial lenders, as depending on whether the lender sees a potential in the business or not. Accordingly, the lender will decide to invest in the business or not.
Different types of business are prevailing in the world today, such as sole proprietor, partnership, corporation and limited liability company. A business not necessarily needs to operate in 1 sector/industry, it can operate in various sectors/industries. There are various theories of business administration such as organizational behavior, organizational structure and strategic management.
Once a person knows about these basic topics, there are certain topics a business person shall know:
- RESEARCH BUSINESS OPPORTUNITY-UNIQUE SELLING POSITION-OPPORTUNITY RECOGNITION:
In order to begin a business, one primary duty shall be done by working in that field to gain more knowledge about how the field works and gain good enough experience to begin a business of their own. Part time work can also be done.
A business shall always have a unique part that will attract the customer and makes them decide if that product or service shall be in business or not. A unique selling price can be either the type of product or service a business offers, it can even be after-sale services, packaging of the products or good customer care.
There are 2 methods of finding opportunities, one is the external method in which a business person sees an obstacle/threat and decides to turn that into an opportunity. The other one is internal method in which the businessman makes a list of his/her hobbies, interests, skills in one column and business opportunities he/she can generate in other.
- RESEARCH MARKET-LAUNCH WHILE WORKING:
For being sure if there is a real opportunity of the business idea prepared by a businessman, research of the market is an important duty to be done. Few key questions shall be answered to have a real business opportunity-
- Who are the dominant players in your market?
- Who is going to be your target customers?
- Who is your competition?
- What are the current price points?
- What are the industry trends?
- What is the typical sales cycle?
These answers will help a businessman make important decisions before starting a business.
Never quit your job for running the business, as it takes 12-18 months to reach a breakeven point and until then it is not possible for the businessman to pay himself/herself salary. Never use your current company’s contacts in order to generate business as it’s a fast way of a person losing their job.
- TYPE OF BUSINESS-BUSINESS STRUCTURE:
The type of business can be sole business, partnerships, a company or even a trust. Each business structure has its own advantages and disadvantages. The type of business will also help a businessman to determine the legal requirement and financial requirements of the business. Many business organizations organize themselves in some sort of hierarchy or bureaucracy in which positions in a company have already been established with various rules and responsibilities. A Limited Liability Company was first available in Wyoming 1977 and in the 1990s in the other states. This business structures combines the pass-through taxation benefits of a partnership with the limited liability of a corporation.
- LOCATION:
Location of a business is an important element before one starts the business. The type of business is a factor which influences the business. A high-class goods shop opened in a middle-class area/slum will not make sense, its not the right location. While selecting a location the population, demographic, existence of similar businesses shall all be taken into consideration.
- DON’T TAKE FOREVER TO LAUNCH-TIME MANAGEMENT:
A business product or service has to be something meaningful and differentiated in an important way from the various competitors. A businessman shall not dawdle on getting their product or service out to the market. An early customer review will be the best way to improve the business.
Time is one of the most important resource of all time. A business person doing a job and handling a person shall make a plan for deciding how many hours a day/week can be contributed in order to achieve the set goals and live a productive life.
- FINANCE:
The money being introduced in a business can be personal finance or borrowed money. Personal finance includes self-savings, money from parents, family, friends. Borrowed money means money borrowed from money lenders, loans, etc. In order to get bank loans a good credit card score shall be maintained.
Starting a business requires an efficient source of capital considering that some unexpected needs arise with time. Start small, then expand as profits start coming by. An emergency saving account shall be made by the businessman for money to live on, and at least the first year of working capital for the business.
- ONLINE TECHNOLOGY-BUILD A GOOD WEBSITE:
For keeping the business vibrant and growing the technology used by the company shall be up-to-date. Wealth is created through inter-connectivity of the Internet and progressive use of technology. The website is considered as a professional product for which it shall be impressive enough to let prospective investors and customers decide to invest in your business. Before starting a venture there shall be a plan of creating a business website, twitter, blog, facebook and much more. A business website is considered as the face of the company.
- MARKETING-PUBLIC RELATIONS, MEDIA & COMMUNICATION- HIRING OF A GOOD SALES PERSON:
For success of a business, the business shall be continuously attractive, built and the target market shall be continuously educated. A great sales person is always an asset to the company. The business is not being only sold to the customers but also the prospective investors and also to the potential employees. Listening to the customer’s requirements, follow-ups, and sales are the main duties of any business.
An entrepreneur shall always keep in mind that communication is the key asset and learning to communicate to the people by being covered by the media is valuable.
- FOCUS ON THE MARKET, NOT ONLY THE PRODUCT-PUT YOURSELF IN THE CUSTOMER’S SHOES:
9 out of 10 businesses focus on their product the most and make a huge mistake of not searching for the right market and the updates of what is going on there. They fail to consider the markets their getting into and thus businesses fail. A business might have the most revolutionary product, but if they fail to enter the right market on the right time, the business won’t succeed. In today’s time it is suggested that getting a small market share is better than trying to invest in a market that doesn’t exist.
If customers are asked about their wants and needs, they will give the businesses an honest reply. People are fascinating and so much more can be known to businesses if they get into the customer’s shoes and engage in “active listening”. This will help receive some business insights which will help to find the market niche.
- ALWAYS OVER ESTIMATE COSTS:
A business shall always have a contingent account before starting the business, because chances are there’ll be some last moment expenses which might need to be covered. Don’t assume that the expenses will be always in green. Accounting always teaches for recording future expected losses and not profits. This will help a business be prepared for emergencies.
- LEADERSHIP AND GIVING BACK TO THE SOCIETY-TARGET MARKET:
A great business leader is he who is aware of the community and is taking actions in order to satisfy the various community needs. Philanthropy is a good business, and if people know about it, more and more people want to collaborate and do business together. Winston Churchill said: “We make a living by what we get; we make a life by what we give.” Ethical and philanthropic behavior will always help a businessman’s career and business.
Who are your consumers? What particular product do they prefer? What after sale service do, they appreciate? These are the things that you should consider. If most of the clients are projected to be of a certain age, you should ensure that you engage them through talks, social media, or even through questionnaires so as to understand what their needs are.
- VISION, MISSION, STRATEGY & TACTICS-GOALS:
Having long time goals is absolutely crucial for success. These goals shall be visual so they can be seen. Always set goals that can be measurable. Eg) My business will make $100 in 1 year. Find a vision of the world that wants to be created by you. Develop a clear vision for your business. Write down strategic goals making them measurable with numbers and a timeline. Tactics will use the resources to achieve your strategic goals.
- FUTURE EXPECTATIONS-RETURN ON INVESTMENT:
A business is prone to failure if proper plans and strategies are not made. Failure means that you missed a step, so use that as a lesson. A business shall always have a beginner’s plan about how to enter the market, and shall also have an exit strategy to be ready to fight back the worst changes within minimum losses. The Return on Investment is got by dividing the Net Profit by the investment. During the start of the business the ROI is low, then it rises as the years go by. For a business to be successful, the Return on Capital should be bigger than the interest rates earned from a bank deposit.
- THE ECONOMICS OF ONE UNIT:
This is the cornerstone of a business plan. People always have dreams of how they will make millions instead of thinking from a micro point about making profit per unit or per hour as everything begins with that. The economics of one unit is to determine whether a business model can be successful (profitable), by calculating if an individual unit of the good or service would be profitable. It helps calculating the contribution margin
THE GOLDEN RULE IN BUSINESS:
Treat the customer in a way that you would be liked to be treated as and this will help you achieve success in life both professionally and financially.
ARTICLE WRITTEN BY:
VRIDHI BHAGNARI.
CONTACT DETAILS: [email protected]
