Understanding the 8 Business Fundamentals That Can Help Your Business Level Up
As Henderson businesses continue to grow and add to the vibrant community and economy here in Southern Nevada, we have been honored to help many local entrepreneurs achieve their dreams, working together to formulate a plan for every stage of a business’s development. As business advisors, a big part of mentoring new clients is introducing them to the fundamentals that underpin all the moving parts in any business.
Being in the thick of daily operations, many owners are often unable to see past the way they’ve “always done things.” Every business owner wants to increase their quantity — that is, the income and cash flow produced by the business. If you are striving toward that goal as step one, and keep repeating step one, it’s easy to get caught in a loop and miss the effect that the quality of the businesses has on the quantity. To increase the quality of any business’s processes, we routinely examine eight business fundamentals — planning, leadership, sales, marketing, people, operations, finance, and legal.
Changes that help improve these eight areas act as a gains multiplier. Balancing these eight areas so they work together seamlessly will improve the quality of the work done and create that magic step two that results in far greater quantities — in terms of product, customers, revenue, and business value as a whole.
First, let’s summarize what we mean by each of the eight business fundamentals, in clockwise order as they appear above:
- Planning: A strong vision and mission should be supported by a fully developed business plan, including steps required for product and service development and meeting the needs of increasing demand.
- Leadership: An active board of directors (or advisors) and a cooperative senior management team that effectively communicates within a positive culture is a mark of value — as is succession planning and a career advancement path for those who will fill these roles in the future.
- Sales: Nothing happens without a well-equipped sales team, using strategies that meet the needs of the marketplace in a systematic and process-driven manner.
- Marketing: The branding and marketing presence of your company needs to be implemented just as effectively as it is envisioned in your marketing plan, with accurate and timely information.
- People: A business’s value depends on its ability to hire, develop, and retain quality individuals who can strengthen culture, ethics, customer relations, production, and innovation.
- Operations: The systems and processes in place that ensure a business delivers on promises made to customers, along with the ability to scale up into new markets, are what increases value over competitors.
- Finance: The value of a business depends on the condition of that company’s financial matters and how well it follows best practices; these include clean, readable financial statements and operating reports, as well as adequate and sustainable tax, insurance, and banking strategies.
- Legal: Keeping legal matters in order means maintaining proper filings, minutes, licenses, disclosures, and intellectual property protections, as well as contracts and investment agreements — this documentation protects a business against legal claims and liability issues.
The above fundamentals are the principal value drivers in growing your business. Balance among the fundamentals is critical to your success. Assessing where you stand now gives you a clearer picture of how your business currently performs in the eight fundamental areas (at Eagle Corporate Advisors, we have developed an Altitude Assessment, which is free and takes roughly 10 minutes to complete online). From there, you can then work to raise competency in the weak areas, so they perform as well as your stronger fundamentals. With these weak points fortified, a business can begin working on all the fundamentals in a strategic way that increases value without destabilizing any aspect of operations.
Your Business, Your Style
Examining the eight business fundamentals is about learning your own working style, too. No one can be all things. By pinpointing your greatest strengths and hiring people who can make up for the areas you lack, you are raising the bar among all the fundamental areas. An entrepreneur who is brilliant at four fundamentals but ignores the other four will only go so far and last so long.
“The way a team plays as a whole determines its success,” Babe Ruth once said. “You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”
And Babe had it right: a team only has value when all the parts work together. If the Yankees had nothing but a lineup of all-star catchers, they’d still boast a tremendous amount of talent — but it would be wasted talent. They’d lose to teams that had acquired or developed players with different skill sets.
Likewise, if your business has excellent legal minds and a top finance department, but your sales people aren’t able to close deals, then the other departments might as well go home. Or if sales are booming but the operations department is unable to meet the need, you will end up with a very unhappy (and fleeting) customer base. One team’s underperformance will also make the rest of the company feel like abandoning ship because their talents are being wasted — but business morale is a whole different topic, and a blog for another time.
Whether your company has a staff of five or 500, these fundamentals must be covered in order for all aspects of a business to work smoothly together. Remember, focusing on the quality and efficiency your business is the only way to produce the quantitative cash flow results you have dreamed of.
Keeping these eight business fundamentals in mind is a great start toward a higher understanding of how your business functions and how it can grow. When you’ve realized you cannot reach the next level flying solo, Eagle can work alongside you, leading your advances, keeping your long-term goals in mind at all times. Email us at Chuck@EagleCorporateAdvisors.com or Brian@EagleCorporateAdvisors.com if you’d like to take a closer look at how your business can reach new highs.
