Innovation Future Specialist
Ted's Guide to Business
Hello, my name is Ted. I am a cuddly character, with a simple attitude to life, and well read. I tell it like it is, in simple plain language. So you will not need your encyclopedia of jargon: "Jar be gone".
Instead of lolling around in the bedroom all day I decided to write a few short guides to business and other stuff.
This is one of my guides ...
People think business is a complicated thing, but at its core business is a simple process.
Things start to go wrong in business when silly people needlessly make it complicated, and then the workers and managers do not understand what is happening. So this guide is here to keep business simple and understandable.
When I say product, it also means "and/or service", as appropriate for your business.
Awareness Raising
So you have a business and you have a product or service that you need to sell. How do you do that?
Well first your potential customers (or "prospective" customers) need to know that your business exists, in particular they need to be aware of what your product or service is. So make them aware of the business, product and/or service.
One way to do this is through advertising - like the loud things on TV that wake me up at night. Apparently, it costs a lot of money to be loud on TV. Radio and post might be cheaper, but less visual. Email is even cheaper, but people do not like spam so that might not be helpful. The telephone is used a lot, perhaps too much, so people do not like that either. So you have a choice of annoying people loudly and visually, or by other means. The trick is to... not be annoying.
So you might say, in your awareness raising message, that business XYZ sells product (or service) ABC. You might want to say how much it is too.
But what is the prospect thinking?
» I do not need an ABC, but a DEF would have been useful.
» ABC is too expensive.
» I do not understand what ABC is.
It would be useful to know those thoughts.
You can anticipate some of those thoughts in advance, and in your message you might want to include a clear explanation of the features of your product, and benefits of using it.
Market Research
This is a fancy name for asking prospective customers what they want and how much they want to pay for it.
You want to find out what they are thinking, as mentioned above. Do they want your product, or something different? Can your product be modified to do what they want? How do they rate the price and quality? Do they understand what your product does?
All of this information is compiled and analysed by your business; and if you are sensible you might adjust aspects of your business and/or product to meet what the prospective customers want.
The market-place will usually have other businesses selling similar things to your business. So market research also compiles information about other businesses (or competitors). What do they do better than your business?
Marketing
The above steps of awareness raising plus market research is called marketing. It consists of other things too:
» Promotions [adverts pushing products at a cheaper price]
» Image and brand [designers and marketing people talking waffle 80 percent of the time]
Marketing people or "Marketeers" spend a lot of time talking about brand - it is their buzz word. Brand is important but you should not leave it to the marketing department (alone). A true brand should arise automatically from what the business does and how it does it. Customers will have an idea in their mind about the quality and price range of your products, and how good your support services are. Marketing aims to brain-wash people into believing a certain message through the use of fancy graphics, happy people, uplifting music, and even the use of celebrities. To them, branding is making a movie that puts people on an emotional high and gets them to associate their high with the business. A lot of prospective customers fall for this, but not all.
A lot of businesses do not understand what is happening with this branding stuff, so they just copy another business. [Crazy world. Something similar caused the last, global, financial collapse.]
Marketing is also associated with sales [selling], but people cannot agree whether sales is within marketing or separate from it [it does not matter].
Selling
You might have one or more people that do selling in your business. They contact people directly and do a similar process to the above two steps: make prospects aware of the business and product; and understand what the customer wants. The sales person will try to offer a "solution" [product], negotiate a price, and "close the sale" [sign an order form].
Production
Following a successful sale your business needs to make the product [or initiate a service]. Manufacturing a product usually involves assembling components that your business bought from other companies [called suppliers]. You might keep a stock of those components so that you do not have to wait for the supplier to deliver them.
However, it might take too long to make the product and so to speed things up for the customer you might have a stock of ready made products.
Be careful not to waste too much energy [keep costs down] and try not to pollute [protect the environment and public health].
Delivery
Send the product to the customer, by: post, lorry, van, email, web site, etc.
The best way of physically delivering lots of products is a subject in its own right, called logistics. It considers whether to have a warehouse full of stock, or make everything when requested, or a combination of these. You might hear: just in time delivery. For lorries, or vans, optimum delivery routes and warehouse locations are calculated [though this is quite a challenge].
Charge Customers and Pay Suppliers
The customer is sent an invoice / receipt and charged for the purchased product. This step can happen before a product is produced.
New orders will be placed with suppliers, to be paid at a later date; and outstanding orders paid.
Related to this is the big topic of cash-flow. A potentially successful company can fail if it gets its cash-flow wrong: suppliers demanding payment before the business can collect enough money from customers can result in failure.
Oh, and periodically, staff will also be paid.
Keeping track of the money is the job of the finance department. [Though they should not think that the money belongs to them.]
They also produce the financial accounts [in a way that the average person cannot understand]: profit, loss, balance, assets, liabilities, etc.
Staff
It is said, and is probably true, that staff are the greatest asset of any business. So managers and the Human Resources [HR] department better believe it. Managers and HR recruit staff, determine pay levels, manage and train staff, and hopefully... keep the staff motivated! Well trained and motivated staff can make the difference between a good dynamic business, and a stagnant one on the way to failure.
Improvement
The world is always changing and just to keep up, your business needs to keep improving. To excel and become a leader you need to innovate; and the Innovation Future Specialist provides the best options for learning how to do this.