Essential Elements for Business Success and Company Fundamentals
The Business Idea
Ideas are the embryo of any business project. Most often, you can identify an unmet need or a better way to satisfy existing ones. Even if a product or service already exists, it may be possible to offer it differently.
The definition of a business idea is broad. A structured approach involves these four concepts:
- Core Product: The main title or definition encompassing the business idea.
- Increased Output: Each good or service associated with the business idea.
- Value Added: Differentiators providing a competitive advantage.
- Utility: Solutions offered to business customers.
The business idea is essential for any business plan, but it needs nurturing, just like a plant needs water. Part of that “water” is the entrepreneur’s development.
Basic Elements for Business Plan Success
Enterprise and Society
Understanding the business environment is crucial. Analyze the market, location, and local, social, and environmental issues in detail.
The Operational Plan
Businesses need supplies for operation and may produce their own products.
Marketing
The commercial department’s main objective is sales, but first, the market must be informed about the product and its benefits.
Taxation
Optimizing taxation to meet obligations while saving on taxes is a major concern.
Entrepreneurship
Companies are like cars: some are standard, some are all-terrain, and some are classic. Taxes, liability, and business conditions influence the choice of company type.
Accounting Concepts
Accounting is a legal obligation and a powerful analysis tool for strategic decisions.
Funding
Good loans or public aid access can be crucial for surviving the first two years.
Plan Works
The business plan is an entrepreneur’s business card. Banks, investors, and government agencies judge it meticulously to determine trust and support.
The Company
In any organized society, companies are essential for providing basic goods and services like clothes, food, education, and housing. The availability of these depends on existing resources for manufacturing and distribution.
Productive resources are used in the production and distribution of goods and services. They are classified into four groups:
- Natural resources (land, water, and energy sources).
- Labor.
- Capital (money and equipment).
- Entrepreneurship.
Primitive societies produced everything themselves. As societies developed, specialized entities—firms—emerged to produce goods.
1.1. Functions and Objectives of the Company
All companies, from a small kiosk to a global computer manufacturer, perform two basic functions: buying and selling.
Companies sell goods and services that households demand. In turn, they buy productive assets from families, mainly labor and money.
Households consume and pay for goods or services from firms with wages and interest received from them. Through production and consumption, companies and households meet their needs.
The basic function of a business is the production of goods and services demanded by society.
Most companies are private, and profit is essential to compensate owners for risks taken. The profit motive encourages private initiative, producing goods and services society demands while creating jobs and wealth.
However, private benefit and societal benefit do not always align. Unwanted effects of business can include pollution, labor abuses, excessive profit-seeking, and lack of competition.