How do you view business and businesspersons? Do you see business as a device to cheat you out of your hard earned money and businesspersons as avaricious individuals eager to make money by hook or crook? There are indeed businesses and businesspersons who fit this description; however, there are also "true" businesses that deliver more value that what they take from you.
Businesses are really value exchange mechanisms. They deliver some kind of value to their customers in return for receiving some value (usually money) from the customers. When the value they deliver is significantly in excess of the value customers pay, word could (only COULD) spread and the business is likely to prosper. (We have used the word could instead of would, because word-of-mouth publicity is often inadequate to generate publicity needed to achieve viable sales volumes.)
On the other hand, if a business consistently delivers value less than what customers pay, word is much more likely to spread in a damaging way and threaten its very existence. This is particularly so in this age of the Internet when people are only too eager to spread bad words (even when it is not deserved). And Internet has also habituated people to getting things FREE!
Today's business needs to be highly pro-active in generating positive publicity. And do it in the midst of unprecedented volumes of noise, that makes one nostalgic about the good old days of the village craftsman who could build a good business simply by delivering high quality craft. (Provided of course, any villager wanted, and could pay for, the work.)
How do you go about Setting up a "True" Business?
Activities in three key areas make up a business - Marketing, Operations and Financials. A fourth area is becoming important these days - Social Responsibility. Let us look briefly at each of these.
Marketing is not just selling. Whereas selling involves selling whatever you have got, irrespective of whether your customers need or even want it, marketing starts with finding out what customers need and want. Needs and wants could be different; you need food and you might want a luxury car.
Marketing becomes effective when you find out not only whether people need or want what you plan to sell but also confirm that they are finding it difficult to meet that need or want. If the market is already flooded with products that meet these, you might find it difficult to sell your addition, unless it comes with something unique that customers value.
Operations involve delivering what you sell at a quality and cost that will help you survive. Quality means meeting customer expectations; if your product does not do it, bad words could spread and you are likely to find it difficult to sell it. And unless you can organise the delivery at a cost that is less than the selling price, your business might not survive for the longer term.
Cost control is not achieved through indiscriminate cost cutting. Rather, it is achieved by organizing your operations to achieve high quality at low costs. For example, by outsourcing certain activities to specialist third parties, you could improve quality and reduce costs.
Financials cover funding and profitability. You need money to set up the business, and carry on operations till you reach profitable business volumes. Successful funding involves estimating how much money you need for these, and then presenting your funding request in a way that impresses investors and financiers.
Achieving profitability involves finding alternatives to deliver acceptable quality at costs less than selling prices, and also achieving sales volumes that generate sufficient margins to recover fixed costs such as rent and staff salaries.
These days, people are increasingly aware of the impact of corporate activities on the environment and on their lives. And they are also able to spread their views far more effectively through social media, activist campaigns and other forums. This has made businesses pay more attention to how they are seen by the public.
Businesses find it an effective marketing strategy to brand themselves as socially responsible. They engage in activities that benefit environment and the communities around them. And publicise these activities to create a great image about them in the minds of the public who include their customers and activists. Corporate social responsibility has become an integral part of modern business.
Business has indeed come a long way from the days of the industrial revolution!