The fundamentals of business are the building blocks for a successful enterprise.
If you’re just starting out as an entrepreneur, you need a solid foundation to take your company from vision to reality.
Even if you’ve already got some experience under your belt, it’s good to make sure you have a handle on these basics before moving forward.
To be a successful business owner, you should know the fundamentals of business. There are many things to consider when you start a business, whether it’s deciding where to set up shop or how to market your product. The following seven lessons will help you get started on the right foot:
Know the Business
The core of your business is the fundamental reason that customers visit. If you are a restaurant, the food is your core product, while tables and chairs may be considered trivial. Think of the core as the heart of your business. The core should be simple; once you have identified it, do not try to improve it by adding unnecessary features. Your customers won’t appreciate added distractions from that which they came to enjoy in the first place!
While it may seem like a basic concept, so many companies forget what their customer base wants at its most basic level. You can always add features or benefits, but if you don’t nail down that core experience for your customer, you’re leaving money on the table and leaving yourself at risk for being outdone by competitors.
Take Uber for example Uber’s core business was built upon an app that made it easy to get from point A to point B. Their initial marketing campaign focused on this idea — “your ride is just a tap away!” — and their user experience was carefully constructed around getting you into a car as simple as possible. This was Uber at its best: the foundation of its business was clear and simple, and the user experience was seamless.
Let’s say you run a restaurant. Your core product is food because that’s why people keep coming back. If you’re doing it right, they don’t even notice the tables and chairs you sit them at — they just want to enjoy the delicious meal you’ve put in front of them.
Another way to think about your business’s core is to ask yourself: “If my business was a person, what would it be?” This question can help you identify what makes your business unique and unlike any other. The answer can also help you to make decisions that are true to the essence of your business in all aspects: from advertising campaigns to hiring practices.
It’s really easy to get caught up trying to make everything better all at once, but if you focus on improving the core first, everything else will fall into place much more easily.
Understand the Market
Do you think there is a market for your product or service? If so, how big is the market and how much will it cost for each person to use your product or service? How much money can you make by selling your product or service and still have profit left over?
To begin understanding the market, you’ll need to know four things:
- What’s already out there? If no one has ever made your product or service, that’s one thing. But if they have, you’ll need to know how yours is different.
- What problem am I trying to solve for my potential customers? How can I stand out from all the products and services that are already out in the market?
- How much will each use of your product or service cost? You’ll need to figure this out because it will determine whether or not people can afford it, and it will also influence how much money you make when they buy it.
- How much money can be made by selling your product or service with profit left over? You’ll want some profit left over so that you’re able to keep making more of your product or service for people who want them!
Once these questions are answered, you’ll be on track in understanding the market!
Plan for Success
A successful business is defined as an enterprise that meets its goals. Therefore, it’s important to set both short- and long-term goals for your business. For example, if you own a restaurant, short-term goals might include:
- Sales of $2,000 in the first month after opening
- 100 new customers in the second month
- 200 new customers in the third month
Long-term goals should be more ambitious. Here are a few examples of long-term restaurant goals:
- Gross sales of $800,000 per year in 5 years
- Expansion into new locations in 3 years
Make sure to review your business plan regularly and revise or add to it as necessary.
Be Prepared to Make Mistakes
- Create an environment where mistakes are not feared. Know that mistakes are inevitable, so instead of dwelling on them, figure out how to learn from them and move on. This attitude will foster openness within your company and allow everyone to learn from each other’s mistakes.
- Be open to learning from others’ mistakes as well. There’s no need to reinvent the wheel when it comes to avoiding common business mistakes. You can save a lot of time (and money) by learning what has worked for other entrepreneurs in the past and steering clear of their errors.
- Forgive yourself for making mistakes. Mistakes are inevitable, but if you beat yourself up for every one you make, you won’t be able to stay focused enough to learn from it and put it behind you.
Know Your Competition
Knowing your competition means keeping a close eye on what they are doing and how it could affect you. It’s important to know the strengths and weaknesses of each of your competitors so that you can better position yourself in the market. You should keep up-to-date with what your competitors are doing, but at the same time as trying to find out their weaknesses, you need to also be looking for ways to improve on their strengths.
Flexibility and adaptability are important qualities in business. If you lack them, you may find it difficult to achieve your goals. Being flexible means being open to new ideas and methods, even when they differ from your own. It also involves the ability to change direction or course of action instantly if need be. If a client asks for something that might seem unorthodox or unusual, don’t react badly — remember that they are paying customers who have their own reasons for wanting certain things done a certain way. Be willing to make mistakes; this will help you avoid repeating them in future situations where it is more important not to err!
If you want your company to succeed, then flexibility must become part of its culture — and that starts with you!
Be Prepared to Adapt to a Changing Environment
Have you ever been in a situation that you weren’t prepared for? Maybe it was your first day at a new job or the night before an exam. It can be terrifying to be thrown into a new environment with no idea of what to expect, and not covering all of your bases can spell disaster for your business.
That’s why planning ahead is so important. It’s easy to fall into the trap of thinking that nothing will go wrong and that everything will work out as planned, but life doesn’t always work like that — especially when it comes to starting a new business.
The best way you can prepare yourself is by having contingency plans in place before they’re needed. The best scenario is being prepared to adapt to anything that comes your way, even if it means giving up some steps of your original plan. An important part of business is being able to adapt to a changing or unpredictable environment and the best way you can do this is by having a plan in place beforehand. This way, you’ll be ready for anything that comes your way!
Scenario thinking can help you prepare for change. See the article I wrote on that here