What is a business? What are basics of business? To my knowledge business is an exchange. How did we get our daily needs or goods in olden days when there is no currency? By exchanging goods or services each other. However, how to measure the exchange? How to balance it between two parties.
Well, it is a difficult task to make happy both the parties. Consequently, there should be one similar item which should satisfy both the parties. I believe this is how currency got invented.
Finally, we got a common item to exchange, but the next question is how much? How to decide the worth of an item? Eventually, demand and supply would have come into the picture.
- A standard item to exchange: Currency.
- How to decide the worth of an item: Based on demand and supply.
- The next step will be? Making profit 🙂
- Next obvious step: Competition.
That’s how the real business started, and the fundamental concept from a street business to worlds biggest corporate is same. Apparently, we are talking about various business terminology today as a business is getting a complex year on year just because of competition.
The majority of the people are getting confused about business terminology, business plan, strategy, model, analysis, and others. I thought it is worth writing an article about it. Here is basic standard terminology everyone needs to understand.
Business Plan:
A business plan is like a bible which contains set of activities to perform to achieve goals in a specified duration. Technically, it’s a blueprint of all other sub plans.
- Marketing Plan.
- Human Resource plan.
- Risk and mitigation.
- Budget plan.
- Growth plan.
- Operations plan.
Business Strategy:
Business strategy is an approach which can be defined based on target customers, budget, competition, and strength of a product. The strategy is not a list of a defined set of routine activities as it is not the same for all businesses. It should be changed based on competition, and you need to strategize the business based on strength and weakness of competitor.
Why does strategy rely on the budget?
Because budget should be sufficient enough for a rich plan.
Why does it depend on target customers? If the plan didn’t strategize according to customer needs, it wouldn’t reach. The strategy should be dynamic as it has to change based on business need and demand.
Why do you need a strategy: I would say, strategy equals to intelligence because it has to be changed based on the circumstances. Consequently, no strategy means no intelligence.
Business Model:
Business Model is the way of representation. For instance, we have a variety of suits to wear; each suit might have been stitched in a different way. Though the purpose of wearing a suit is same few models will be most popular and famous, few might fail. Similarly, the business model plays a vital role in the success and reach of customers.
Why do you need a model: The business model only has the capability to place you uniquely in the market though you have the similar business which is already in the market.
Business Analysis:
I would say analysis is similar to the word diagnose in medical terminology. If a doctor doesn’t diagnose accurately, he can’t prescribe a right medicine. Similarly, if you don’t understand the business you can’t execute it in a right direction, the analysis is a continues activity. Analyzing current state of business would help to find the right solution.
Why do you need analysis: Business analysis helps to improve the product and business, it will let you know in which direction you are bad.
Revenue Model:
The revenue model is set of various channels to create revenue, few are direct, and few may be indirect. The majority of the founders are not thinking about second revenue channel on a product or service; it is critical to create various channels to have a strengthen revenue pumping.
Why do you need revenue model: Continuous revenue is crucial if one channel stopped the other can put you in safe.
Business Risk:
Anything which affects the core business such as selling a product or service is a business risk. It may change immediately, a month or a year later.
Why do we need to calculate risk: Identifying risk is another important activity, so you can be ready with mitigation.
Also Read: Here is the success key for entrepreneurs
He is the Author, Product Specialist, Business Consultant, Entrepreneur, Public Speaker, Thought provoking writer, and Joke writer. Follow him on Twitter
Awesome article