Please explain That Business
As with any facet of life there are specific types of language, expressions and meanings used to describe or explain what’s going on. The business world is typical and operates with peculiar and specific speak that relates to and helps communication in and out of that realm. Let’s take a moment to get a nuts and bolts handle on what four of the key words actually mean or express relative to a business.
PLAN; a Business Plan is the document you have written that best describes what your business is, does and how it will operate. It will contain an appealing statement of purpose, your mission. This is what you tell people when they ask what is your business. The plan will describe why the business was created and how the management team will carry out day to day operations. Described will be the believes , values and social conscience. Products , services, customers, marketing and people management will be defined. The financials will be outlined for start-up and projections of sales, expenses and expected profit will be calculated , projected and tabled. Realistic goals and future growth will be outlined. The document will describe to you and others the core strategies that will be used to achieve the business goals or profits .
Strategy; this defines the scope , direction action to be taken by business to achieve goals. Derived from early Greek relating to an Army General , strategy is about the process of actioning your plan. A Genghis Khan strategy instilled total fear in every enemy and invented a scorched earth policy to lands he invaded. General Sun Tzu the brilliant tactician of 6th century China laid down strategies for war, life and business that hold astonishing relevance for today. Strategies take into account the environment in which the business operates, the market, stakeholders , customers and importantly the business resources . Strategy is about the managing process. Measuring , monitoring and evaluation of business actions. Strategy implements the processes and required changes to advance the business objectives.
Resources; more than simply the materials to build or manufacture. Business resources are the financial capacity to operate or invest . The depth of reserve funds held or accessible like borrowing capacity. Importantly people. Business doesn’t make the decision to drive business or be innovative. Marketing is a resource. Core competencies , personal and technical competencies. These are skills knowledge , experience and expertise that allow business to invent , develop build and sell products and services for profit and gain.
Model; The most nuts and bolts concept of Business Model is the Store-keeper. Simply set up a shop in a location where customers congregate, display a product or service and allow the transaction sale to happen. A simple model is bait and hook originated by King C. Gillette. Give away free razor handle and create a continuous market for a disposable product, the razor blade. Today phone companies give away free phones and sell the talk-time plan. Computer printers are sold so cheap the profit comes from the print consumables and cartridges. Franchising model is granting rights and business philosophy or brand product by charging a percentage of sales and license fees. Direct sell model is like Amway, Avon or Tupperware where no fixed location or shop is required. The product is sold direct to the consumer. Dell computers is similar, direct from manufacture to end user. Other schemes include Party plan , Auction model like ebay. The Premium business model used by BMW and Mercedes where low volume sales allow high profit margins. Pyramid model where money is exchanged for enrolling customers without products or services being delivered.
Rod Richards
Posted by Rod Richards on 20 Jun 2010