The 8 Pillars of Profitable Business
The 8 Pillars of Profitable Business
The 8 Pillars of Profitable Business
In order to be successful, every business consists of departments that need to operate smoothly in a team environment. This is true of even the smallest of businesses where all parts must run smoothly and cohesively. These pillars apply to all size companies and include one person operations as well. What are the pillars that define a successful business? They are, in no particular order, the basic essentials to a functioning business:
Marketing If you can't create or define a market for your product or service you can't sell it and you have no income. Your marketing or branding is what sets you apart from your competition. What makes your company different from all the companies you compete with both directly and indirectly? Not only are you competing with companies that sell similar products and services, but you are also competing with others who want to sell to your customers. There is only so much money to go around. Your marketing or branding is what makes you unique.
Sales Your marketing defines your potential customer base. You now need to sell these customers. Will you use direct sales such as outside salespeople or a call center to sell your product or service? Will you use channel sales with other companies taking a lead in your sales effort? Can you sell wholesale and let someone else sell to your final customer? Or, can you be an OEM producer for a larger company? Depending on your resources, you will need to pick one or more of these ways of selling. You will also need to determine which effort can produce the most profitability for your company. Please note I use the word profitability and not sales. There is a huge difference. Sometimes selling less is the best pursuit.
Customer Service How you interact with your customers and vendors is crucial to repeat sales and to gaining referrals from current customers. Just think of the times you have been put off by a company after a single interaction with that company's customer service department? I know there are a number of companies that I will not do business with as a result of poor customer service. I include vendors here as well. Treat them as a customer. Treat them with the same respect you would want if you were a vendor for their company. It doesn't mean you need to buy from them. Your vendors are some of your best sources for market intelligence and know what is going on in your industry. After all, they very likely sell to your competition.
Products and services Whether you sell product or services, make sure they are top-notch and solve a customer problem or issue. Produce only the best. Good is a failure and you won't stay in business for long if you only produce good products or services. Copying someone else doesn't work unless your product is light years ahead of theirs. Know your advantages before you go to market. Use customer focus groups to ensure you can solve someone else's problem,
Operations - This is all your backend production and technology. Know how your processes work, why you have them and be sure they are efficient. Other than staff costs, this is the area where you will most likely spend the most money. Operations have to be streamlined and efficient. If you are selling a product, pay careful attention to cost, but never at the expense of quality.
Human Resources You need to know how to manage people and the laws that govern how you treat your staff. One wrong move here can jeopardize your entire company if you are on the wrong side of a lawsuit. Your human capital is the future of your company. Nourish your staff, pay them well and encourage them to do a great job. You also need to hold them accountable for completion of tasks, however. There is a fine line between leading your people and pushing them. Be a leader!!
Accounting and Finance Someone has to bill your customers and pay your bills. You need to have at least one budget depending on the size of your company. You need to crunch numbers to understand whether you will meet your revenue numbers and know if your expenses are in line with your budget and revenue projections. You need to know you will have appropriate cash flow to meet all your obligations in a timely manner.
Legal This is the last major pillar of the successful business. Good legal advice whether on staff or hired out will keep you out of trouble. Legal is necessary for reviewing contracts, offers, intricate purchase orders, defining a company structure and much more. If you are in doubt about anything legal, consult an attorney. You don't need the most expensive attorney. What you do need is someone who specializes in your type of business.
Most anything else you can think of will fit into one of these categories. If you are a small organization or even a one person operation, you will need to perform all these functions or hire out where you lack expertise. Future blogs will explore each of these pillars in more detail.
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