Episode Summary – 11 Critical Business Functions that must happen
There are 11 critical business functions that must happen in harmony for a business to work and thrive. Many new business owners are not aware of them or avoid the ones they are not comfortable with which is very dangerous. In our experience the significance of these functions and the amount of effort they require are frequently underestimated by people who are new to business. Understanding what has to happen will significantly enhance your chances of success.
Links and resources
Worksheet-Critical Business Functions
Blog-Evaluating a business in 3 steps
Blog-Managing a business- tips for new business owners
Self Assess Your Readiness with our Business Readiness Test
Critical Business Functions
This episode focuses on the critical business functions that owners, have to do on a daily, weekly, monthly or even annual basis to run a business.
It’s easy to get sucked into the excitement of becoming your own boss and quitting the day job. Sometimes the realities of the tasks you’ll have to do in your business can get a bit lost.
Critical business functions need to happen in harmony.
For any business venture to be successful, a lot of stuff needs to go right. In the early days, much of that success is going to be down to you.
So it makes sense to understand your strengths and weaknesses in the context of the characteristics required to succeed.
When considering your strengths and weaknesses, it’s crucial to understand the things you’ll need to do if you start a business.
We’ve found people underestimate the amount of work involved in creating and managing a business. Particularly a business capable of replacing their income and growing into a valuable asset.
We’ve put together a list of 11 critical business functions that a typical business owner needs to do. We designed a downloadable “business functions worksheet” to help you.
Use the worksheet as a “checklist” to mark yourself against or determine which critical business functions you’ll delegate to others. The worksheet is available in the episode show notes section at www.shouldiownabusiness.com.
We will also refer to this worksheet in later episodes.
Questions to ask yourself for each critical business function.
The 11 critical business functions are important if your goal is to build a strong business. We’re assuming of course that no one listening is contemplating going into business to fail.
As we go through them, ask yourself
- Can I do that?
- Am I good at it?
- Would I like to learn how to do this?
- How I competent to do that?
- Will I have time to learn how to do it myself?
If you do decide to do all of these yourself, it will come at a cost somewhere. Think back to your self-assessments from Episode 2 You-360. Would working 18 hours a day fit with you and your family’s life? Getting bogged down with business administration is very common.
The list of business functions won’t apply equally to every type of business or in every situation. We are generalising a little. The functions aren’t in any particular order, nor any specific weighting applied as to whether one is more vital than another.
11 Critical Business Functions
1) Business Strategy, Business model and planning
- Things like writing a business plan,
- deciding how you are going to grow and sustain the business
- what’s the best legal structure for your business,
- protecting your intellectual property,
- goal setting
How much do you know about these things?
How long will they take?
Will you need external help?
- What’s your brand essence, message, style, tone of voice and market positioning,
- what forms of marketing will work best for your business and who is your target market,
- who is going to design and run the marketing campaigns
- What is your process to convert a lead into a sale,
- will you use digital sales funnels,
- do you need a customer relationship management (CRM) system,
- Lifetime Value of customers (LTV),
- Cost Of Acquisition for customers (COA),
- costing and pricing strategies,
- will you offer discounts
4) Your product or service
- how do you define your product or service,
- Innovation to keep ahead of customer expectation and competitors,
- new product ideas,
- warranty periods and management,
- purchasing from suppliers, agreements etc.
5) Systems and Processes
- what systems and processes will be used in the business
- Quality control, process control and quality assurance you need
- continuous improvement strategy,
- efficiency management to reduce costs
- Recruitment, retention and motivation of employees or contractors
- Do you know the law,
- managing staff,
- training and education
7) Health & Safety
- Many businesses overlook the significance of health and safety
- Do you know your obligations?
- A WHS plan for your business
with laws and regulations to conduct your business
- Do you need a licence,
- Certificate of competency- this will depend upon local laws, state laws, federal or national laws.
- What recordkeeping do you need to demonstrate compliance, such as staff training records?
- How will you manage all of these moving parts to ensure that the business can operate and succeed?
- Managing people
- Bookkeeping and expenses under control,
- Tax obligations and reporting
- Accounts Payable/Accounts Receivable
11) Managing Risk
- IT and Cyber risk
- IP risk
- Business risks-what things could severely impact your business.
Managing 11 critical business functions is a juggling act.
And of course, that’s not necessarily everything as different businesses will have different requirements around all of this stuff. You need to understand that juggling a dozen balls every day is the norm and, don’t think for a second that things don’t regularly go wrong. Unexpected issues will crop up like staff getting sick, suppliers being late, deliveries going missing. As the business owner, you’ve got to deal with these things and with them well.
Don’t worry at this point – we know it’s a massive list.
In episode 10 explain how to assess your knowledge, skills and gaps against the 11 critical business functions. Then in episode 11 we explain how to choose your support team so that you can fill in the gaps.
Some simple business design and planning is essential.
The business design and planning process can also help in thinking through the details.
A lot of work goes into creating a sustainable, successful business capable of delivering what you want out of your life.
It rarely happens by accident.
Consumer trends and, to a slightly lesser extent B2B trends, now change so fast that the chances of long term success have reduced. You must learn how to stay on top of trends by using market testing techniques or niching down to an area where that evolution is a little more subtle or less volatile.
OK, so that is it for today’s show. We really hope that the topics we’ve covered today will help you to decide whether business ownership is right for you or not. If you’re enjoying the show, we’d love it if you would give us a rating on whatever platform you’re accessing it.
Next time, we’re going to explore what we call the “fundamental 4” – So till then, stay happy – bye for now.
The information contained in this podcast is general and does not take into account your situation. The content does not constitute legal or financial advice and should not be used as such. You should consider whether the information is appropriate to your needs, and where applicable, seek professional advice from a financial adviser or lawyer in your jurisdiction. To find out more, please go to www.ShouldIOwnABusiness.com.