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| Overview of Business Systems |
| Sunday, November 05, 2006 |
There is more to a good business than a good product or service. Good businesses have good systems and can leverage the combined benefits of these systems into increased profits and market capitalization.
Some of the primary systems that are important for a successful business model inlcude:
- Legal
- Product
- Cash Flow Management, Finance, and Accounting
- Marketing, Sales, Communications
- Business Systems
- Collections
The relative importanc of these systems can be detemrined by the management team, however, none can be overlooked.
Legal Systems:
Your business has to have the ability to protect its assets and the assets of the owners. Without some plan for protection a good business can disapear in one legal action and the owners might lose more than they imagined possible. Additionally, good legal systems can assist a business managers in finding new opportunities, eliminating competition, and negotiating with employees, suppliers, or customer. In certain business, particularly those that are government regulated, it is absolutely critical to have a knowledge of the law or a knowledgeable lawyer to help guide the business in its business decision.
Product Systems:
It is critical to understand what your product is and how is created, while maintaining a degree of vigilance regarding change in the industry. Good product systems and healthy research an development keeps your business current on available technologies that can make your business more effecient and more caable of satisfying market demands. This is true in many fields that seem as though they have remained the same for years. If you are paper clip manufacturer, you product knowledge or research and development activities could perhaps help you identify the next great way to manufacture your product and help you gain critical marketshare. In the event, that you discover a technique or material that your competitors desire, you could sell or license that intellectual property for a fee and draw profits from paper clips made by others.
Cash Flow Management, Finance, and Accounting:
Businesses are revenue seeking entities and most businesses are profit seeking entities. Cash flow management systems allow businesses to project the quantity of cash resources that will be available and predict slow periods when additional capital will be needed. Finance systems allow business to effectively allocate resources and recognize methods of obtaining new resources to keep the coffers full enough to go from quarter to quarter. Accounting systems are central to the success of almost every business, because it help you keep track of where the money is going, recognize when you need to enter a collection action, prepare taxes. Additionally, the quality of performance of the accounting function can determine the elegibility of firm for new capital from lending sources.
Marketing, Sales, and Communications:
Most businesses need to sell in order to stay alive and to do this the need to understand and communicate with the market. The marketing function includes advertising, distribution, and merchandising and is oftem closely link to the activities of the sales departments and the financial department. Sales is exactly what is sounds like and a whole lot more a good sales team can often overcome a poor product for a short period of time, but most sale professionals seem to prefer to have product strength on their side. The key in sales is closing the deal. Communications is important to every aspect of the business. The high cost of obtaining new customer makes a communication system that focuses on customer relationships and service a must have for most businesses, if they expect to be successful in the long run.
Business Systems:
Although all of the systems described thus far are business systems, this category refers more specifically to the systems that allow information to pass from one part of the company to another and the systems that convert data into actionable or marketable information. If you examine many of the successful Internet based business you will not that they usually had a great deal of competition in their market, however, business systems made a great deal of difference when determining which business would survive and fail. Good business systems allow businesses to determine what is and is not working faster.
Collections Systems:
A sale costs your business money unless you can collect. One of the keys to surviving in business is being able to convert accounts recievable into revenue. |
posted by Domesticated Dog @ 9:50 PM  |
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