The Basics of Business Fundamentals
No matter how good your business idea is, if you don’t know the fundamentals of business, you can’t grow your business. Fundamentals provide a foundation for your future and the ability to scale when you are ready. Many business fundamentals are glossed over or ignored altogether, yet these simple techniques can make you a better, more prepared, successful business owner.
You have found Clearinity because you have become aware of your business and the path it could take.
What is fundamental?
By definition, a fundamental as defined by Dictionary.com is “serving as, or being an essential part of, a foundation or basis; It is a central or primary rule that something is based.” In other words, fundamentals are the basics of a specific thing.
As mentioned above, a driving fundamental is being aware of your vehicle and the road ahead. Many times after we have become more confident in our abilities, we forget to remind ourselves to check our awareness of how big, fast, or powerful the vehicle is or the road’s trajectory ahead. This fundamental getting glossed over often results in close calls or, even worse, crashes.
Just like your car, you have become aware of your vehicle and the road ahead. You might find this article a good primer on things you should remind yourself of more often as you scale and grow your business.
What are the fundamentals of Business?
Some of the accounting terms you will become familiar with are revenues, expenses, assets, income statements, balance sheets, COGS, and cash flow statements. Accurate accounting gives you a way to evaluate your business’s health and informs your business decisions; it is essential for a healthy business.
People help your business both financially and operationally. Having a process and way to talk to people allows you to keep work both efficiently and effectively. Topics explored in the fundamentals of people management in business include but are not limited to leadership styles, human resources, communication standards, and project management.
We promote workflows and standard operating procedures at Clearinity. We have recognized that process is fundamental in a healthy business. Many people may have processes in place. Make sure you document your processes as it improves communication, makes expectations clear, and you can have a way to measure effectiveness.
Technology should be your friend. Technology allows for less human error and more cross-department communication. Without process, technology will not help you scale your business. Often, our clients come to us with too many technology platforms. We help navigate the benefits of a single inventory management software in the Benefits of IMS.
Product Based Business
LIFO, FIFO, and AVCO will be common acronyms you will want to familiarize yourself with, and we go over these terms in Inventory Accounting 101.
Acronyms like BOMs, WHIP, FINISHED, and RAW are important to product-based businesses. These terms allow for the separation of product stages and materials in the manufacturing process.
In a product-based business, you must have an operations team or process. These are the people that help get your product from point a to point b. They will also be doing tasks such as Stock-take, warehouse management, and inventory quality control. The terms we discuss in Inventory 101 are SOPs and inventory management.
Once your customer orders your product, you must have a way to fulfill their order. There are lots of ways to do this. Fulfillment models 3PLS, multichannel fulfillment
To keep new and old customers coming back, having sales is vital to a product-based business. Sales fundamentals include marketing, front end, back end, UX/UI.
Why do we care about business fundamentals in a product-based business?
The foundations of a product-based business are not like a service-based business. As a product-based business owner, you have the added component of fulfillment. There are both people and inventory to manage.