A Guide on Business Fundamentals (Strategies and Skills)

By Indeed Editorial Team

Published June 27, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

An individual typically requires specific knowledge, which varies and depends on the industry and business type, to operate and manage a business. Gaining a functional understanding of the various core processes of running a business is also important. Understanding business basics can help you if you're an entrepreneur or intend to transition into a new industry. In this article, we discuss business fundamentals, outline some fundamentals of running a business, explain basic strategies that businesses may implement, and describe some important business skills for professionals.

Understanding business fundamentals

Business fundamentals refer to the basic processes that typically occur while a business operates. These fundamentals can help a company build a successful enterprise or implement strategies that can yield long-term benefits. Usually, it's important for a business to understand these fundamentals before adopting more sophisticated strategies. In addition, learning the business basics can help a business to adopt innovative strategies and establish itself as an industry leader. These strategies can help a company differentiate itself from other competitors.

Related: What Is Business Savvy? (With Traits and Ways to Improve)

Common fundamentals of a business

Here are some business fundamentals that can help a company implement successful practices:

Marketing and branding

It's often useful for a company to understand branding and marketing processes so that it can develop an effective customer base. Branding and marketing are important components that inform people about an organization, its products, and its services and encourage them to patronize the brand. An effective method for learning marketing is to understand the stages in the customer decision-making process and how they relate to basic marketing strategies. A business can use this knowledge to develop a personal marketing strategy by focusing on specific stages in the decision-making process.

Financial management

Managing business finances is another important part of running a business. For instance, financial management in the early stages of operating a business typically involves attaining startup costs. Funds typically come from various means, such as bootstrapping, receiving grants or loans, crowdfunding, or finding investors. It's helpful for a business to have a detailed record of its financing. It's also important for a company to create cash flow predictions and have a framework detailing how it intends to distribute its funds.

Accounting

Accounting differs from financial management because it focuses on a business’ regular income and expenses. In a small business, professionals can perform accounting effectively by using a basic spreadsheet and implementing a method to help organize receipts and other documents. A company can also employ accounting software for small businesses. In contrast, larger companies typically use accounting departments.

Strategic management

Creating and executing a business strategy is an important part of running a business. The early stages of a business typically entail developing a business plan, which details a company’s objectives and strategies that it may implement to achieve them. Strategic management is also relevant in the later stages of running a business because it involves updating the business goals and reviewing the strategies to ensure the company can achieve these goals.

Research and development

Most products require research and development before and after creating them. For instance, before selling a product or service, a company may decide to research the market and its competitors before developing a product's final version. In addition, after introducing a product or service to the market, a company may continue to conduct research, which helps the company to learn new ways to modify the product and remain competitive.

Related: Guide to Understanding Business Development (Plus FAQs)

People management

Another important part of operating a business is having the ability to manage other employees. A business has a higher chance of success when its employees can communicate effectively, have the necessary resources to thrive, understand their responsibilities, and feel motivated to achieve their goals. Irrespective of an organization's size, people management also involves adopting effective managerial techniques. It's also important for a company to know how to create an encouraging and healthy work environment that fosters productivity and employee loyalty.

Legal considerations

It's important for a company to identify the legal considerations concerning the business and the regulations that govern the industry. This may include choosing the most appropriate business structure, following the relevant guidelines, and obtaining the necessary licenses. It may also include understanding the various contracts that a business may enter, such as contracts with freelancers, employees, or vendors. A business may consider consulting with a legal practitioner, discussing concerns and questions with more experienced individuals, and conducting research to understand the laws and regulations governing the business and industry.

Vendor management

It’s usually important for companies to understand how to work with vendors if they regularly utilize their services. For example, vendors may include a printing company that creates company cards, a farm that supplies ingredients, or a courier service that transports products. If a business doesn't consistently work with vendors, it may decide to hire them for rare occasions, such as caterers for a company event. Generally, it's important to learn how to choose a vendor, understand potential contract terms, determine associated costs, and maintain long-term relationships with them.

Negotiating

Negotiating is an important business skill. For instance, it may be necessary for a company to negotiate the contract terms of a freelance employee or with a vendor for a bulk purchase deal. Businesses may negotiate an exchange of services in some instances. For instance, a small catering business may propose catering to a marketing company's event in exchange for marketing services. Good negotiation skills can help a company reach a favourable agreement with the relevant parties.

Networking

Networking is also an important part of building a business. Learning how to network within the industry and with other professionals can help a company identify opportunities to improve and expand. For instance, networking may lead to a company’s contacts referring its offerings to other clients. Similarly, it can allow a company to work with new vendors, meet more experienced professionals, and attend industry events where the business can learn new techniques, which may help it to advance.

Basic strategies for business

Adopting a practical approach to business management can inform a business’ decision-making and help it prepare for various situations. Common strategies for a business include the following:

Learning about the market

It's useful for a business to study the market and have knowledge about the customers' demands. Learning about the market can help a business obtain relevant information, which can enable the company to improve its products or services so it can meet those demands. It may also help a company demonstrate that it values customer satisfaction, encouraging brand loyalty and helping it get new customers through referrals.

Quality over quantity

Producing high-quality products and rendering exceptional services is an important aspect of operating a business. Customers typically patronize brands that offer the most quality products. It's important for a company to exceed its customers' expectations and make them want more by prioritizing quality products, as it can also affect the product's and brand's longevity.

Social media and online marketing

Social media and digital marketing provide viable opportunities for businesses, particularly new businesses. Customers use the internet to search for products or services that suit their needs. It may be beneficial for a company to market its products and services through websites and online ads to help attract new customers.

A company can also consider personalizing the customer experience to help build loyalty. Using online resources to create digital marketing materials, such as catalogues, brochures, or e-books, is also helpful. A company can then share these resources with its customers through its social media profiles or e-mails to market its products and help build brand recognition.

Important business skills for professionals

Here are some important skills that business professionals typically have:

Management

Management is an important skill for professionals because it helps them predict upcoming events and allows them to make the necessary preparations. With proper management, a business receives direction, increasing the chances of success. It's also important for a company to know how to manage available resources to ensure that it effectively allocates them to the required areas. Equitable distribution of resources ensures that a company continues to grow as it improves productivity and creates an environment for employees to thrive.

Practical thinking

Practical thinking is important in every situation, as this skill helps professionals become decisive and ensures that their decisions create optimal outcomes with little or no risks. Although risks are a part of handling a business, being practical helps professionals calculate the effects of these risks and make the most appropriate decision for the business' good. It also involves making adequate plans to avoid or mitigate these risks to ensure business processes operate smoothly.

Related: Top 10 Business Skills You Need as a Professional

Long-term thinking

This skill entails having the ability to differentiate between current trends and market patterns that have a long-term effect on the industry. It helps business professionals make changes to a company's products to help ensure the business maintains its customer base as it grows. Long-term thinking can also help protect a business from future challenges that may threaten its sustainability. For instance, deciding to register a company's intellectual property rights at the early stages of the business can help protect the business from theft and misuse of its intellectual property.

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