From the course: Developing Business Acumen

Know the basics of your business

From the course: Developing Business Acumen

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Know the basics of your business

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- For you to improve your business, you need to understand, what business are you in? What markets do you compete in? Who are your competitors? Who is your customer and how do you make money? The better you understand how your business goes to market and who you're competing with, the more effectively you can contribute ideas and see how your efforts are going to drive overall business performance. Let's look at an example. Let's imagine you work at a corner pizza place. The business itself is in the business of providing meals. Its customers are hungry people. The way the business makes money is by selling pizza at a price higher than the cost of the inputs. The inputs include the dough, the sauce, the toppings. It also includes the labor involved in making the pizza, the oven, the electricity, the building itself. The way the business competes, is it competes in the local market. I don't know if you've ever taken pizza beyond the local geography, but it doesn't hold up very well. So you're competing in a specific geography. The competitors are other pizza joints, of course. But there's other competition. Other quick serve restaurants, grocery stores. Even frozen pizza makers are competing for the money from those hungry people. Once you understand your business and its basics, it allows you to compete more effectively in the marketplace. If you know you're competing with the other pizza joint down the corner, you can emphasize things that differentiate your product. You can also beat your frozen competitors by highlighting how your product is fresher than theirs. This understanding of the market and how you're competing in it, is going to help you focus on how you're going to compete more effectively. To understand these aspects of your business, go interview people in the organization. Talk to somebody in sales or in marketing or in strategy and ask them: How do we compete? Who are our customers? What differentiates our business? By understanding that, you're going to understand the keys to making your business successful.

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