The term Business Fundamentals refers broadly to all the knowledge, resources and effort that make up your business. For the purposes of this article, we’ll also be adding the environment your business operates in to your fundamentals mix. When taken together, those factors form a comprehensive make-or-break checklist for small business owners.
If your business fundamentals are incomplete or you haven’t yet established them, you’ll find it extremely difficult to serve customers, build a brand and generate profit.
The four categories of business fundamentals
You can break your fundamentals into four broad categories:
- People
- Resources
- Processes
- Environment
Each one is important on its own, and together they can be the difference between success and failure.
1. People
Your fundamentals begin with the people involved with your business. That includes you, any employees you have, your suppliers, your customers and your support network. A business can’t survive without at least one person being responsible for its operation, nor can it survive if no one is interested in its products or services.
Answer these questions to evaluate the strength of your people:
- Do you and your employees have the skills required to complete the primary activity of your business?
- Do you have reliable and affordable suppliers in place that can ensure the continued delivery of your products or services?
- Do you have enough customers to pay your bills and wages (including your own wage)?
- Do you have a network of people you can turn to for advice or support?
2. Resources
Resources are the things you own, or have access to, that allow you to create and deliver your products and services. Without adequate resources, you’ll struggle to deliver your offering. If you can’t deliver your offering, you can’t make money.
Answer these questions to evaluate the strength of your resources:
- Do you have enough money to pay for supplies, marketing and personnel?
- Do you have the tools required to create or deliver your offering (e.g. paint brushes for an artist, coffee beans for a café, computers for an accountant)?
- Do you have the assets needed to interact with your customers and make sales (e.g. a website, marketing collateral, social media profiles, an email address, a telephone)?
- Do you have enough time to work on all the aspects of your service delivery (e.g. marketing, customer service, administration, product or service creation)?
3. Processes
Your processes ensure you can deliver your product or service in a way that meets a customer’s expectations. Some examples of business processes include the way you handle invoices, what you do when you make a sale, how you ensure your products are well stocked and how you handle customer interactions. Any series of steps that you follow to complete an activity related to your business can be considered a process (even if it’s just a single step). Strong processes are ones that are written down, repeatable and accessible by anyone working in your business.
Answer these questions to evaluate the strength of your processes:
- Do you have processes in place for handling financial information (e.g. paying wages, receiving and sending invoices, paying taxes)?
- Do you have processes in place for delivering your product or service?
- Do you have processes in place for generating new sales or leads?
- Are your processes written down in an easily accessible location?
4. Environment
Your environment refers to the world in which your business operates. That includes your competitors, prevailing societal beliefs and the geographic location your business operates in. Compared to the previous three categories, it’s not easy to influence your business environment. You can think of your environment as the rules that your business needs to play by in order to win. For example, if you operate in a country where 99% of the population are vegetarian it will be very difficult to build a successful organic meat business.
One more thing to note about your environment, and business in general, is that luck will always play a role in your success. You can’t change your luck, but you can put yourself in a position to benefit from good luck and be resilient against bad luck.
Answer these questions to evaluate the strength of your environment:
- Is it easy to sell and distribute your products or services in your environment?
- Does your environment have enough people who are likely to want to buy your products or services?
- Does your environment have enough room for your business to operate without being significantly impacted by competitors?
- Do the values of your business align with the values of the environment in which you wish to sell?
Next steps
Now that you have an understanding of the factors that make up your business fundamentals, the next step is to score your business across those four categories. Answer all 12 questions above with a “Yes” or “No” answer. If you answered “No” to any of the questions, brainstorm ways to improve your businesses performance in that category.
After 12 months, ask yourself the questions again, record your answers and see if your ratio of “Yes” to “No” is improving. If it is, your business is also improving. If not, go back to the drawing board and brainstorm ways that you can improve.
This blog post was adapted from our 3 Business Mistakes That Will Halt Your Growth eBook. Download the full eBook here.
