The Business Edge Blog

February 5, 2013

Every Business – 5 Key Parts

5 parts of a business“A business is a repeatable process that makes money.  Everything else is a hobby.” – Paul Freet

Josh Kaufman in The Personal MBA provides the following definition of a business.  It is a repeatable process that:

1.  Creates and delivers something of value…
2.  That other people want or need…
3.  At a price they’re willing to pay…
4.  In a way that satisfies the customer’s needs and expectations…
5.  So that the business brings in enough profit to make it worthwhile for the owners to continue operation.

At the core, every business is fundamentally a collection of five interdependent processes, each of which flows into the next:

1.  Value creation – discovering what people need or want, then creating it.
2.  Marketing – attracting attention and building demand for what you’ve created.
3.  Sales – turning prospective customers into paying customers.
4.  Value Delivery – giving your customers what you’ve promised and ensuring that they’re satisfied.
5.  Finance – bringing in enough money to keep going and make your effort worthwhile.

If you take away any one of these five parts, it’s not a valid business any longer.

When planning a new business or analyzing an existing venture, always begin with a review of the five parts – they will help you discover any major issues or gaps quickly.

______________________________

If you can master the concept of these processes, you’ll be well on your way to being ready to present your business to potential investors, bankers, mentors or your board of directors.

Questions for Consideration:

Think about the business you’re in:

  • What are the five core processes?
  • Can you describe or diagram them in detail?
  • How do they fit together?
  • Where do you need help?

Please share the five core processes in your business using the Comments section below. I look forward to hearing from you.

Until next time – Remember to mind your business!

Advertisements

June 5, 2012

Technology Tools Help You Run Your Small Business – Part 2 – Accounting Software

Technology Tools – Accounting Software

If you don’t have a good handle on your finances, beginning with the money you spend (expenses), the money you receive in the course of doing business (revenues), how much your business is able to keep (profit) or how much you are in the hole (loss), how do you know how you are doing?  I’m amazed when potential clients tell me – “There is still money in the checking account” as a response to my questions about their business financial situation and they are serious, not just kidding!  If you are still keeping a box or a file of receipts hoping that at tax time you will find a great accountant who will work with you to translate the collection into a tax return, chances are you are not watching your cash flow as closely as you should be.  It’s time to get serious about your business.  It’s OK if you like keeping track in your own spreadsheet if it gives you the information you need as a business owner.  For most small businesses QuickBooks is the most widely used although there are many other low cost (and even free) online accounting applications that let you track your finances from anywhere.  Many banks and business credit card services let you download your recent transactions directly into your accounting program.  Some will even categorize your expenses into spending categories to help you with the record keeping.

You and that great accountant that you work with will appreciate your step up into an accounting system.  You will be able to keep your finger on the pulse of your business and start to do some analysis and answer questions like: What is your typical sale?  When do your customers buy?  What products or services are the most popular?  What is your business income? What is your profit margin?  Can you afford XYZ?

What would be helpful for you to know about your business financial systems?  Share your thoughts in the comments area below.

Stay tuned for Part 3 – Time Management – in the next issue of this blog.

Read prior blog topics and visit my website at www.thebizedge.biz to find solutions to your business issues.  Enjoy your business!

Create a free website or blog at WordPress.com.