How to optimize a business... sorry to build it
Many people think that it is easy to be an entrepreneur and that it is easy to build a business. But many do not know that in the first 5 years, 95% of the opened businesses fail. This is due to a deficient structure and lack of knowledge about how a business should be built.
WHAT IS THE OPTIMAL BUSINESS STRUCTURE?
As you can see in the diagram below, The structure of a business is composed of 8 parts:
- team, mission, leadership (on the outside);
- cash flow, communications, systems, legal aspects and products (on the inside).
Looking at the outside of the triangle, which do you think is the most important of the 3? The correct answer to this question is all are equally important, and the reason why many companies fail to move to the next level is because they do not focus on all 3 aspects, and entrepreneurs become overwhelmed by the situation.
MISSION (What is the spiritual motivation of the business and what is the message you want to convey to the public?)
If you fail to define the spiritual purpose of your business, then your success will likely be diminished. For example, Facebook's mission is "Bring the world close together", that is, to bring loved ones closer to each other, which they have succeeded in doing. Facebook has created new opportunities both for people through communication possibilities and for businesses through promotion possibilities.
Recently, Mark Zuckerberg announced a series of changes regarding this platform, precisely due to the degeneration from the purpose for which it was created. If this company did not have a clearly established mission from the beginning, towards which to focus all its efforts, Facebook would probably have become just a social media platform or maybe even a commerce platform.
Learn more about these changes in our article: The hysteria of the changes announced by Facebook.
TEAM
It is very important to hire good, passionate people from whom you have something to learn. Working in team and collaboration of its members can bring you success. Probably, one of the key issues that many of you will face is to teach your employees to work as a team and leave competitiveness aside. Many people join the workforce with a mentality focused largely on salary increases, promotions, obtaining positions or larger offices, which is why they become competitive with their teammates. However, we believe that as long as competitiveness can contribute to increasing team productivity and motivation, it is beneficial.
Think about a team in the army, a place where Cooperation is essential for survival.If individualism had been promoted within it, we probably wouldn't be talking about heroes now.
LEADERSHIP
The leadership part is seen in how the company operatesIf it is struggling to survive financially, employee morale is low, productivity and revenue are declining, and expenses are rising, we must realize that this is due to poor management.
Entrepreneurs in this situation usually blame their employees, the economy, or the competition. However, the best and most successful entrepreneurs analyze their mistakes and learn from them. Does this mean you have to give up your business now? Not at all! You need to analyze the mistakes you made, learn from them, and at the same time develop your leadership skills.
These skills are easy to learn by getting involved in simple projects where you have a leadership role. For example: Captaining a football team, organizing a charity event or participating in interactive coursesBy placing yourself in a leadership position, you will acquire the skills you need and be able to create relationships with diverse people, an aspect that is always beneficial in business.
PRODUCT
Many times I have heard people say that they have a great idea for a new product. Even with a well-targeted market analysis, some products fail. According to the business pyramid, the product occupies the smallest part. Although it is very important, it is the least important unit in the structure of a business. You may find this strange, but think about it: the world is full of extraordinary products and product ideas, but many of them never reach the market or, if they do, die quickly.
Many entrepreneurs focus on the product, invest money waiting for a prototype, receive it and are not satisfied and thus have wasted money and time focused on one thing. Focusing on the team, leadership and the rest of the pyramid structure will achieve more satisfying results. This triangle of business structure is a tool around which many successful entrepreneurs have modeled their companies.
LEGAL ASPECTS
You will not be able to operate in business without legal agreements that are essential for defining and creating products. Through patents, trademarks, and licenses, a company builds its own property, which adds value and provides protection for the company. Without a legal team and well-drafted legal agreements, big problems may arise that can cost you money.
Sistema
A business is a set of systems and we certainly all agree on this. No business will ever grow beyond the capabilities of the founder if it is not made up of systems. If we take the example of the human body or a car we will see that they are made up of several systems. The human body is made up of the skeletal system, the nervous system, the digestive system, the endocrine system, etc. We will not list them all, but you get the idea, right? And in the case of cars it is the same. All these systems work together to form a main system which in our case is the business. It's just that in business there are accounting, communication, legal, supply, production, distribution systems, etc. The entire business relies on the efficient functioning of its systems and it is enough for one of the systems to crash or stop functioning efficiently and the entire business will be blocked.
Imagine you have a plan to grow your business, but your accounting system refuses to spend money on it. marketing and technological development in an attempt to save money. We probably all realize that the result is disastrous. That's why it's good to focus on each system of the business and when something doesn't work how to find the problem and solve it.
COMMUNICATIONS
In general as an entrepreneur you need to communicate very well and speak many "languages". And when we say “languages,” we mean the languages of business. This means using the language of the law, while also using the language of accounting, real estate, marketing, or the internet. This way, you will be able to be a leader and be able to have meaningful conversations and make calculated decisions.
Many entrepreneurs have worked in other companies before where the leader may have been completely out of touch and unaware of what each of his subordinates was doing. This is an example of a leader who didn't take the time to learn the language of your quality, a serious mistake in business. Of course, Learning the language of business takes time and practice.. It is similar to learning a foreign language and the best way to learn a foreign language is to travel abroad and immerse yourself in that culture. In the case of business it is the same. Start listening, understanding and speaking the respective language by starting with discussions with your employees or collaborators. If you are still in the beginning phase you probably have an accountant, so you could start by talking to him and understanding the “language” he speaks.
CASHFLOW
Cash Flow, also known as “what you have left when you draw the line,” is the bottom of the triangle. And since we’ve talked about cars and the human body, cash flow can be likened to fuel or blood flow. Without money, blood, or fuel, the business, body, or car will not function. At the same time, a body can bleed, a car can lose fuel, and a business can lose money. Another role of yours as an entrepreneur is to make sure there is enough money to fuel the 8 units while keeping the business profitable.
In conclusion, as an entrepreneur, when building a business you need to focus on all 8 parts if you want to make a profit. Set your goals and aim high. Be convinced that you can achieve any goals, no matter how grand they may seem at first. If you have the courage to take this path of entrepreneurship, focus on building or streamlining the 8 parts, be innovative and offer experiences to people.
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