Business basics 101 – The 3 elements of business

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What are the three fundamental aspects of a business? Any business?

We suggest that there are three fundamental elements that have to work together for a business to function.

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business basics 101

A product or service.
For any business to succeed, it must offer something of value to its customers or clients. This can be a product or a service or a combination.
Do you know exactly what your offering is?

Marketing and Sales.
In order to make money, you have to sell your product to a person or a company.

Management.
In order to coordinate the processes involved in acquiring and delivering the products or services you provide, there needs to be organizing, coordinating, evaluating and prioritizing; money, time, people, and other resources of your business.

Business basics 101

Part one – Marketing and Sales. While we will get into much more detail, later on, to start with we will take a look at the difference between Marketing and Sales.

Generally speaking, Marketing can be defined as the process and activities that gain attention or build awareness around your brand, product or services. This is the attention-getting aspect of the sales process. While itis part of “selling” or “sales” it is worth considering it as distinct from the process of actually “getting the order”, “making the sale” or “closing the deal”. While these processes may overlap and there may be no clear distinction where one ends and the other begins, it will be helpful to think of them as two different activities. It has often been said, nothing happens until the sale is made. While stickily speaking it may not be entirely true, it is still a good concept to keep in mind. As this presentation is simply an overview of business basics 101, we will not go much further on the vast topic of marketing and sales at this point. However we will layout some of the most important concepts in sales, we will cover each of these topics and a lot more in later chapters.

Business basics 101 – Marketing and Sales.

  • Sales is a “numbers game” – The more people you reach the more you will sell
  • There are (at least) 5 definite steps in the sales process.
    We have put “Marketing” in the category of prospecting and labelled it step Zero
    • Contact – first impression
    • Qualifying – Are they a customer or am I wasting their time or my time?
    • Presentation / Demonstration – Conviction
    • Dealing with objections (or hesitations) to buying – Answering their questions in a way they will hear it.
    • Closing – Asking for and getting the order
  • There are really on two questions you have to answer to the satisfaction of the customer
    • Do I trust you?
    • Is this the right product or service for me?
  • There are many “closes” that should be learned and used. A “Close” is simply a specific way to ask for the order.
  • While the details vary by product or service the process is exactly the same for all products and services.
  • People make buying decisions emotionally and justify the sale (to themselves or others) logically. Selling is a matter of appealing to people’s emotions and then reinforcing that emotional decision with a value that can be logically demonstrated.
  • You CAN sell effectively without lying, exaggeration, deception, or misinformation. In fact, honesty is still the best policy.

Each of the topics above and many more not mentioned are explained in detail in other sections of business basics 101

Delivering value

Part two – Profitably delivering your product or services.
Commerce is the process of exchanging value, in today’s world a person or company, vial a person, gives you money in exchange for something they want that you can deliver. As Marketing and Sales, this is also a very large topic where some basic principle will be true for all businesses but where the specific details will vary greatly depending on the exact type of values your company offers or is planning to offer. While it may sound corny or obvious, based on the number of new companies that fail within the first 3 to 5 years, the following statement is not at all obvious. You have to make a profit.

In simple terms, Profit is your selling price minus the cost of your product or services, plus overhead. Wow, that’s simple. But it is not as simple as it seems, particularly for people new to running a company. Let’s take look at some simple examples.

If you are selling primarily products, there is what you pay for the product. But there may also be costs for shipping the product to you, storage, the cost to keep track of the inventory, then the cost of delivering the product to the customer, maybe the cost of insuring the product inventory, maybe the cost of accepting returns or dealing with faulty products.


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