What is a business as a question might sound silly. But, accounting and business studies teachers will be in a better position to tell how difficult it is to provide a comprehensive answer to this seemingly simple question. I can tell from the perspective of being both a business studies teacher and accounting teacher before going into consulting that the term ‘business’ sounds lot much easier than it entails.
This article will provide a possible complete answer to the question what is business? It will be done in three sections. The first section will bother around providing a working definition of what a business are its features and characteristics. The second section will dwell on the challenges of running a business while the third section will teach you how to develop a business model that will sell. Note that these are quite a lot to cover in an article of about 1200 words like this. It will be nice if you invest some more time reading other articles in this website as it all add up to your knowledge of understanding what a business is and how to run a successful business.
DEFINITION AND MEANING OF A BUSINESS
A business is any meaningful venture that we go into with the sole aim of making profit while at the same time satisfying the needs of those in need. Socially and officially, a business must not be based on illegality, but, in reality, the most profitable businesses are all based on illegal and socially unacceptable activities.
For any venture to be considered a business, it must be out to solve an identified problem and have the potential of putting money in the purse of the owners. I see a lot of people set up something that is not meant to specifically solve any problem and call it a business. When they fail, they will blame the environment.
Four conditions must be met before anyone can validly refer to an activity as a business:
- There must be a need
- There must be potential to make profit satisfying those needs.
- There must be a system on ground to run the business
- The right set of people to run the system (human resource)
It is a pity that a lot of people do all sorts of things and call it business. The other day, a young ambitious man walked into my office with a depressing look on his face. Upon enquiry, I quickly noticed he has lost all that he inherited from his grand parent to an unprofitable venture. He simply felt that an idea will sell and quickly threw all the money he had into it. We shall be talking more on how to develop a business model in the last section of this article. I hope you now have the clear picture of what a business is? Now let’s discuss the challenges that a business might face.
CHALLENGES OF BUSINESS AND MANAGEMENT IN TOUGH TIMES
All that we do as people come with one form of challenge or the other. It is our ability to overcome that challenge that makes the difference between a winner and a looser. Running a business is not an easy task that can be carried out by all. It is usually best to tackle challenges by knowing what they are. So this section of this article on; ‘what is business’ will do just that.
- Being competent in performing management functions
- Facing and overcoming stiff competitions
- Being sensitive to the business environment
- Coping with compliance and regulatory requirements
- Managing information flows
- Being efficient in human resource management
- Managing cost more than your competitors
- Coping with natural disaster (including business failure)
- Marketing of goods and services
- Coping with globalization
- Raising fund to finance good investment opportunities
HOW TO DEVELOP A BUSINESS MODEL THAT WORKS
Ok, now that you have a picture of what the challenges ahead of you as a business owner or a business manager, this is now time to look at how to develop a business model that can do justice to the above identified business challenges.
EIGHT (8) STEPS IN BUILDING A BUSINESS MODEL | business model building process
SETTING OF OBJECTIVES
The first step in developing a business model is to clearly set what your mission and objectives are. By having a mission statement and a business plan that contains a well articulated company’s objective, the whole process of building a business model will be made easy and simple. In fact, a clearly stated objective is a compass that directs an entity’s affairs.
CALVING OUT A NICHE
Find your customer wherever they are. It is not enough to have an objective as a business, you need to find out if there are real people out there that are actively looking for what you set out to provide. It will be serious waste of time, energy and money building a business model in an area where nobody is interested in.
CREATE A PRODUCT OR PRODUCTS FOR YOUR NICHE IN A UNIQUE WAY
This is what many scholars refer to as product differentiation. A good business model aims to deliver a product that is uniquely different from what every other products or service in the market has to offer.
COMPETITIVELY PRICE YOUR PRODUCTS OR SERVICES
Depending on the market sector you are operating, pricing can play an important role in making or marring the success of a business. Strategic cost information is obtained from the strategic management accounting process so as to competitively price your product.
DEVISE A MARKETING STRATEGY
Gone are the days when you simply concentrate on your products and expect customers to flood in. The era of production and product marketing concepts has long passed. The selling, marketing and societal marketing concepts are vital ingredients that make a business model work.
SET UP SUPPORT DEPARTMENT
Since the main objective of a business model is to deliver value to the customers in a profitable manner and still gain their loyalty, the process of building a sustainable business model will lack merit if customers are not provided with the right kinds of support needed to get maximum value for their money. A sound business model does just this. Also as part of the support department, the accounting, finance, legal, and IT functions are taken care of. Consider outsourcing some of these functions if there is no in house capacity to deliver.
A golden tenet in customer care service is that you get feedback from your customers. The essence of getting this feedback is to ensure that customer satisfaction remains pivotal at all stage.
It is worth noting at this point that business model building is all about value creation and value delivery in an ethical and profitable manner. It is apparent from the above discussion that business model is geared towards creating something of value for your customers, use any form of bait to attract your customers, find a way of making your customers pay, and ensuring that profit came out of that process. Remember that satisfying an identified needs and making profits from it is what a business is all about. If you have been following in this article, you will notice that the question; what is a business takes more than definition to answer.