The mention of business attracts many people, as they envision owning a million-dollar company and all the advantages that come with it. However, as many discover later, there is a whole lot more involved in running a business.

That is why this article will dig deep into the concept of business, all the hidden points you need to arm yourself with before going into business. This information will increase your chances of succeeding in your new business. Here are some of the main points.

• What is a Business
• What is the Concept of Business
• Types of Business Concepts
• Types of Business
• How to Choose the Right Type of Business
• What are the Basics of Business
• Characteristics of Business
• What is a Business Purpose
• What is a Small Business?
• How to Start a Business Today
• Most Profitable Small Businesses
• The Best Business for Beginners
• The Business Services in High Demand
• What is Business Model
• The Business with High Profit Margin
• Concept of Risk Management
• The Concept of Business Ethics

What is a Business

The term business has been defined in many ways, but they all mean the same thing. In a general and much clearer sense, Business is the activity of making one’s living or making money by producing or buying and selling products (such as goods and services).

Simply put, it is “any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, a partnership, or have any such formal organization, but it can range from a street peddler to General Motors.”

Now that we know what business is, let us now consider what a business concept is and other aspects involved in running a business.

What is the Concept of Business

Concept of business can be described as an idea for a business that includes basic information such as the service or product, the target demographic, and a unique selling proposition that gives a company an advantage over competitors.

A business concept may involve a new product or simply a novel approach to marketing or delivering an existing product. Once a concept is developed, it is incorporated into a business plan.

It is also good to note that business concepts can be defined according to each business. The reason for this is that describing a business is never a formula. There are different ways to communicate what business does and why it exists.

Nevertheless, there are some key elements that must be explained by a business concept for it to be considered useful and informative. First of all, the product or service being offered must be easily understood.

This means that whatever the company is offering must be clearly communicated through the business concept. Quite often, this task is taken on by PR companies (such as the top pr agencies australia options) that can get the business concept easily understood. On the other hand, the target market should also be mentioned in this concept. This market will be the segment that the business is looking to serve.

Finally, the company’s overall competitive advantage should conclude the statement, to describe how this proposal differs from what already exists.

Business concepts are employed regularly in the business world, most commonly to present new business ideas to potential investors and also as institutional information displayed to the public to transmit the essential qualities and elements behind a given business.

To better understand how a business concept can be best described, here is an example below.

Calories Watch is a mobile app designed to track the number of calories being burned during an exercise routine. The app calculates an estimate by inputting the nature of the training and the time spent on it.

The company’s founder Mr. Puller is preparing a business document to potential investors where he will explain his idea and how it can make money for them. In order to do this, he needs to come up with a business concept that is both appealing and informative for these individuals.

As we previously discussed, a business concept explains the reason of existence and reach of a given product or company. In this case, a business concept for Calories Watch might be the following: “Calories Watch is a mobile app designed for fitness enthusiasts to help them track their progress while they are training.

This app measures the number of calories being burned by using innovating calculation methods that no other app is currently able to provide”.

When it comes to business concepts, there two (2) of them. Both Modern and Traditional concepts. Each of them will be discussed and compared.

Types of Business Concepts

The Modern Concepts of Business

The modern concept states that business earns profit through customers satisfaction. Business without consumers is not business. It develops long term relations with customers.

The business should earn profit with social responsibility. It should care about the welfare of society and consumers. it must work within the law.

Profits can be made by maintaining social accountability. It attempts to incorporate every aspect of human civilization. It sees modern business as a socio-economic institution that is always responsible to society.

Simply put, a business organization should determine the needs of the customers and deliver them the desired products. The business organization began to think that businesses should earn profits through the service and satisfaction of the customers. That is what defines a modern concept of business.

Traditional Concept of Business

The traditional concept states that the business aims to make a profit through the production and marketing of products. Products can be of various types.

The traditional concept states that the objective of the business is to earn profit through the production and marketing of products.

For example, the main objective of business of material goods, services, ideas, and information, etc. is to get maximum profit according to the traditional concept.

In the traditional business concept, business is the production and distribution of products for personal gain. The profit-oriented concept also knows as the traditional concept of business. Any human activity directed towards the acquisition of wealth or earning profit through production or exchange of goods was treated to be a business.

As a result of the different concepts of business, this has prompted many authors to define business in different ways. Here are some of there definitions.

Definitions of Business by Authors

“Business comprises all profit-seeking activities and enterprises that provided goods and services necessary to an economic system. It is the economic pulse of a nation striving to increase society’s standard of living. Profits are a mechanism for motivating these activities”. – Boono & Krutz

“Business may be defined as human activity directed towards producing or acquiring wealth through buying and selling goods”. – Lewis H.Haney

“Business is the sum total of those processes which are engaged in the removal of hindrances of persons (trade), place (transport and insurance) and time (warehousing) in the exchange (banking) of commodities”. – James Stephenson

“Business is a system created to satisfy society in needs and desires”. – Buskirik Green & Robgers

“Business represents the organised efforts of enterprises to supply the consumer with goods and services”. – Musselman & Hughes

“Business may be defined as an activity in which different persons exchange something of value whether goods or services for mutual gain or profit”. – Peterson and Plowman

“Business means the whole complex field of commerce and industry, the basic industries, processing and manufacturing industries and the network of ancillary services, distribution, banking, insurance, transport and so on, which serve the world of business as a whole”. -F.C.Hooper

Apple Corporation of USA:

“We design develop, produce, market and service microprocessor-based personal computers in the United States and foreign countries.”

Hewlett-Packard Company of USA:

“Hewlett-Packard’s business is concentrated on developing high-quality products. Which make unique technological contributions and are so innovative that customers are willing to pay premium prices. Products are limited to the areas of electronic testing and measurement and to technologically related fields. Customer service, both before and after- sale, is given primary emphasis.”

Hindustan Lever Limited:

“To meet the everyday needs of people everywhere with branded products and services.”

Nestle India Limited:

“Manufacturing and marketing of nutritional foods to the public who prefer instant food.”

Based on above definitions, business may be defined as:

Business refers to those economic activities, which are connected with production, purchase and sale of goods or supply of services with the main object of earning profit. People engaged in business earn income in the form of profit. For example, Farming, Manufacturing, Fishing, etc.

Thus, business is sum total of all gainful human activities, which aim to create, exchange and possess wealth in the form of physical output and useful services.

Types of Business

Although there are several different types of businesses, choosing one doesn’t need to be difficult. Here are the seven most commonly-used business types and some questions to help you pick which business type is right for your startup:

1. Sole Proprietorship: The simplest type of business. Sole proprietorships are owned and operated by a single person and are very easy to set up.
2. Partnership: A business owned by two or more people who share responsibilities and profits.
3. Limited Partnership: A business partnership, often between business operators and investors.
4. Corporation: A type of fully-independent business with shareholders. One of the most complex business types.
5. Limited Liability Company (LLC): A mixture of a partnership and a corporation, designed to make it easier to start small businesses. One of the most popular business types for startups.
6. Nonprofit Organization: A type of business that uses its profits for charitable purposes. Tax-exempt, but must follow special rules.
7. Cooperative (Co-op): A business owned and operated for the benefit of the members of the organization that use its services.

How to Choose the Right Type of Business

To help you decide, we’ve created a flowchart to walk you through the decision-making process:

Decisions you’ll need to make when choosing a business type:

• Debt and Liability: Most small businesses and startups accept the personal liability associated with a sole proprietorship or partnership as a necessary risk of doing business. If you’re in a high-risk industry (such as selling CBD or firearms online) or simply want to keep your business and personal matters private, you can limit personal liability by filing for a more formal business structure. The downside is that this typically takes more paperwork, costs more to register, and may have greater reporting or upkeep requirements than simpler business types.
• Filing taxes: To oversimplify a bit, you have two options when it comes to filing your business taxes. You can file business profits/expenses on your own personal tax returns, or you can have your business file taxes separately as its own entity. Most small business owners prefer the simplicity of filing taxes on their own returns, but filing business taxes individually can help you keep your personal and business finances separate.
• Partners or Investors: If you’re starting your business with a partner or private investor, you won’t be able to form a sole proprietorship. You can choose between a partnership (where all responsibilities and liability are shared equally), a limited partnership (which lets you dictate responsibilities and liabilities for individual members), or an LLC (to protect all members from personal liability).
• Hiring employees: Some of the simplest business types—like sole proprietorships—can make it difficult to hire employees down the road. While it’s possible to change your business type to grow with your business, if you already have employees or plan to hire employees, it may be better to future-proof with a more formal business structure like an LLC or corporation.
• Are you starting your business for profit or to help a cause? If you’re just concerned with helping others and aren’t operating for profit, forming a nonprofit can grant you tax-exempt status—although there’s a lot of paperwork required.
• Will your company be owned and operated democratically by its members with no single owner? Known as a “Co-op”, this type of business is rare.

What is Nature of Business

The nature of business refers to the overall activities of a company in its quest to create, market, and sell a service or a product. Essentially, the main focus for what a company does in a particular sector or industry is known as that company’s nature of business.

Organization

There are different ways to understand the nature of the business. One could look at a company’s organizational setup, the goods, services the company offers, and even the structural formation that is used.

This refers to the nature of how a business is set up, using the common business structures of a sole proprietorship, a partnership, a corporation, a limited liability company (LLC), or even a limited liability partnership (LLP).

Types of Businesses

The nature of business can be viewed in the types of businesses that operate within a particular sector. There are businesses in the government sector, the military sector, the international sector and the private sector, among others. Today’s technology explosion has probably added a few more business sectors, too. Here are some business examples of the private sector.

Service business

Public relations firms, law firms, medical practitioners, and software consultants are examples of service businesses. These businesses provide services like advising, counseling, and consulting. 

Merchandising business

Merchandising businesses buy products at bulk, wholesale prices, and sell them to consumers at a higher markup. Many small businesses today are using online exchanges to buy goods from foreign countries, and sell them to American consumers at higher prices. 

Manufacturing business

Manufacturing companies buy raw commodity products like nuts, grain, wheat, and more to create new consumer-friendly products. Unlike merchandising companies, which offer products to consumers in the same format that they bought in bulk, manufacturers often create new products from the raw products used. 

Business Classification

Another way to assess the nature of a business is to research a company’s industry classification. The business classification system is how governments organize companies into specific categories to track the progress or decline of a particular industry. 

There are two key classifications—the SIC (Standard Industrial Classification), run by the U.S. Department of Labor, and the NAICS (North American Industry Classification System), a joint North American effort by Canada, Mexico, and the United States.

SIC 

The SIC was originally developed in the 1930s and was last updated in 1987. It was created for the government’s purpose to collect, analyze, and publish U.S.-related statistical data.

Today, there are still business directories that use the SIC classification system, but the SIC system has been most surpassed by the NAICS (see below).

NAICS

The NAICS system is generally seen as the official business classification system today. The NAICS organizes similar companies from Canada, Mexico, and the U.S. into industry categories to obtain data related to the overall health or weakness of a particular industry. The NAICS relies heavily on number-based classification system. 

What are the Basics of Business

There are three major reasons why businesses fail: lack of money, lack of knowledge and lack of support. By mastering the basics of business success, you’ll gain the knowledge necessary to acquire the support and money you need for your business.

So just what are the essentials of business success? There are seven key areas of activity that determine whether your business will live or die:

1. Marketing. Your ability to determine and sell the right product to the right customer at the right time.

2. Finance. Your ability to acquire the money you need, and account for the money you receive.

3. Production. Your ability to produce products and services at a high enough level of quality and consistency over time

4. Distribution. Your ability to get your product or service to the market in a timely and economic fashion come to mind.

5. Research and development. Your ability to continually innovate and produce new products, services, processes and responses to your competition

6. Regulation. Your ability to deal with the requirements of government legislation at all levels

7. Labor. Your ability to find the people you need, deal with unions, establish personnel policies, training and organizational development

And from this list, comes the very specific, identifiable reasons for business success:

• Having a product or service that’s well suited to the needs and requirements of the current market
• Developing a complete business plan before commencing business operations
• Conducting a complete market analysis before producing or offering the product or service
• Thoroughly developing advertising, promotional and sales programs
• Establishing tight financial controls, good budgeting practices, accurate bookkeeping and accounting methods, all backed by an attitude of frugality
• Ensuring that there’s a high degree of competence, capability and integrity on the part of key staff members
• Having good internal efficiency, time management, clear job descriptions, accompanied by clear and measurable output and responsibilities
• Developing effective communication among the staff and an open-door policy for managers, especially the business’s owner
• Generating strong momentum in the sales department and placing a continued emphasis on marketing your product or service
• Making concern for the customer a top priority at all times
• Putting determination, persistence and patience at the top of the list on the part of the business owners

And now that you know the seven essentials of business success and the identifiable factors involved in helping your company succeed, let me share the top reasons for business failure. Thousands of companies were studied to determine the reasons businesses fail. Here they are, in order of their importance:

• Lack of direction. Business owners often fail to establish clear goals and create plans to achieve those goals, especially before starting out, when they fail to develop a complete business plan before launching their company.
• Impatience. This occurs when business owners try to accomplish too much too soon, or expect to get results far faster than is truly possible. A good rule to remember is that everything costs twice as much and takes three times as long as expected.
• Greed. When entrepreneurs try to charge too much to make a lot of money in a short period of time, failure isn’t far behind.
• Taking action without thinking it through first. An entrepreneur acts impetuously and makes costly mistakes that eventually cause the business to fail.
• Poor cost control. An entrepreneur spends too much, especially in the early stages, and spends all their startup capital money before achieving profitability.
• Poor product quality. This makes it difficult to sell and difficult to get repeat business.
• Insufficient working capital. An entrepreneur expects–and requires–immediate, positive cash flow that doesn’t occur, leading to the failure of the business.
• Bad or nonexistent budgeting. An entrepreneur fails to develop written budgets for operations that include all possible expenses.
• Inadequate financial records. An entrepreneur fails to set up a bookkeeping or accounting system from the beginning.
• Loss of momentum in the sales department. This leads to a decline in cash flow and the eventual collapse of the enterprise.
• Failure to anticipate market trends. An entrepreneur doesn’t recognize changes in demand, customer preferences or the economic situation.
• Lack of managerial ability or experience. An entrepreneur doesn’t know or understand the important skills it takes to run a business.
• Indecisiveness. An entrepreneur is unable to make key decisions in the face of difficulties, or decisions are delayed or improperly made because of concern for the opinions or feelings of other people.
• Bad human relations. Personal problems and conflict with staff, suppliers, creditors and customers can easily lead to business failure.
• Diffusion of effort. An entrepreneur tries to do too many things, thus failing to set priorities and focus on high-value tasks.

Characteristics of Business

Characteristics are the features that are necessary to classify the business.  Therefore let’s have a look at them.

Economic Activity

Business necessarily has to be an economic activity. But what exactly is an economic activity? Any activity that gives a monetary return is an economic activity.

For example, if your friend’s father picks you up and drops you at college every day, he is doing this act out of kindness. But if he starts a transportation service of picking up and dropping by charging money then it’s an economic activity.

Buying and Selling

The basic activity of any business is trading. The business involves buying raw material, plants and machinery, stationary, property etc. On the other hand, it sells the finished products to the consumers, wholesalers, retailer etc. The business makes available various goods and services to the different sections of the society.

Regularity in Dealings

Business is a repeatable economic activity that generates money. For example, if you sell your old bike and it generates money. Also, it’s an economic activity but is you doing this on a regular basis? No. As it has no regularity in it, it cannot be accepted as a business activity.

Similarly, there is a dealer who deals in the purchase and sales of second-hand bikes. For him, it’s a business activity as there is a regularity in his dealing. A single transaction of purchase or sale cannot be classified as a business.

Profit Motive

Profit is an indicator of the success and failure of the business. It is the difference between the income and expenses of the business. The primary goal of a business is usually to obtain the highest possible level of profit through the production and sale of goods and services. It is a return on investment. Profit acts as a driving force behind all business activities.

Profit is required for survival, growth, and expansion of the business. It is clear that every business operates to earn a profit. The business has many goals but profit making is the primary goal of every business. It is required to create economic growth.

Risk Factor

It is well known “Higher the risks, higher the return”. Business attracts risk. While initiating business it is not guaranteed 100% that the business will be successful. There is an anticipation that there might be demand for its product or service in the market. But the market is always dwindling the subject to risk. The business may even earn profit but the amount of profit earned may vary.

Business is exposed to two types of risk, Insurable and Non-insurable. Insurable risk is predictable.

a) Taxes

b) Change in the volume of expected sales

c) Cost of supplies and equipment

d) Overhead costs

e) Salaries

f) Cost of goods and services offered

Unpredictable factors include:

a) Changes in trends and tastes of customers.

b) Impact of the local economy on customer base.

c) Any unexpected action taken by your competitors.

The calculation and management of the risk is vital to ensure the success of a business firm. Insurance and Risk management helps in minimizing the risk associated with the business.

Creative and Dynamic

Modern business is creative and dynamic in nature. A business firm has to come out with creative ideas, approaches, and concepts for production and distribution of goods and services. It means bringing things in fresh, new and inventive way.

One has to be innovative because the business operates under a constantly changing economic, social, and technological environment. The business should also come out with new products to satisfy the growing needs of the consumers.

Customer satisfaction

The phase of business has changed from a traditional concepts to modern concepts. Now a day, business adopts a consumer-oriented approach. Customer satisfaction is the ultimate aim of all economic activities.

The modern business believes in satisfying the customers by providing a quality product at a reasonable price. It emphasizes not only profit but also on customer satisfaction. Consumers are satisfied only when they get real value for their purchase.

The purpose of the business is to create and retain customers. The ability to identify and satisfy customers is the prime ingredient for business success.

Social Activity

Business is a socio-economic activity. Both business and society are interdependent. Modern business runs in the area of social responsibility.

Business has some responsibility towards the society and in turn, it needs the support of various social groups like investors, employees, customers, creditors, etc. by making goods available to various sections of the society, the business performs an important social function and meets social needs. Business needs the support of a different sections of the society for its proper functioning.

Government control

Business organisations are subject to government control. They have to follow certain rules and regulations enacted by the government. Government ensures that the business is conducted for social good by keeping effective supervision and control by enacting and amending laws and rules from time to time.

Some important acts framed by the government include:

i. The Competition Act, 2002

ii. Foreign Exchange Management Act, 1999

iii. The Environment Act, 1986

iv. Indian Companies Act, 1956

v. Consumer protection Act

Optimum utilisation of resources

Business facilitates optimum utilisation of countries material and non-material resources and achieves economic progress. The scarce resources are brought to its fullest use for concentrating economic wealth and satisfying the needs and wants of the consumers.

What is a Business Purpose

Your business purpose is the reason you have formed your company boiled down to a single sentence (or two). It can be industry specific or general enough to include ancillary and future business activities.

To understand the business purpose, it is important to distinguish it from your company’s vision or mission. The latter concepts are critical to the success of your business, but are legally distinct from a business purpose.

How to Write a Purpose Statement

To write a business purpose statement, you need to be able to answer one important question: why is your company in business? If you are forming an LLC, it is required by law that you provide a statement of purpose.

For many other business structures, it is still advisable that you have a documented statement of this kind, whether required or not

A business purpose statement should be short, at just one to a few sentences. While it should be specific to the type of work you plan to do, you should also leave some room for ambiguity to provide your company room to grow and develop over time. Depending on your jurisdiction, statements that are too vague may not be accepted for business filing purposes.

Business Ideas

A business idea is a concept that can be used for financial gain that is usually centered on a product or service that can be offered for money. An idea is the base of the pyramid when it comes to the business as a whole.

The characteristics of a promising business idea are:

• Innovative
• Unique
• Problem solving
• Profitable

A business idea is often linked to its creator who needs to identify the business’ value proposition in order to launch to market and establish a competitive advantage.

As we continue with this article, we will still discuss about some profitable business ideas.

What is a Small Business?

Small businesses are either services or retail operations like grocery stores, medical stores, tradespeople, bakeries and small manufacturing units. Small businesses are independently owned organisations that require less capital and less workforce and less or no machinery.

These businesses are ideally suited to operate on a small scale to serve a local community and to provide profits to the company owners.

While small businesses can also be classified according to other methods, such as annual revenues, shipments, sales, assets, or by annual gross or net revenue or net profits, the number of employees is one of the most widely used measures.

Some small businesses, such as a home accounting business, may only require a business license. On the other hand, other small businesses, such as day cares, retirement homes, and restaurants serving liquor are more heavily regulated and may require inspection and certification from various government authorities.

How to Start a Business Today

If you want to start a business today, but you don’t know how to begin from zero, here is a simple and effective approach. Follow these 10 step-by-step instructions to get started on your business today

Write down your vision

You can’t get somewhere without knowing what the vision for your business and your life is. While the end result of your business will probably look a little different than your initial vision, you have to have the end result in mind to start.

What do you want to do with your business? Try answering these three simple questions about your product or service and you’ll have a business vision nailed:

• What is it?
• What do I get?
• How do I get it?

Research your market

This is such a boring step. There’s no way around it. It’s unsexy and it’s in-depth. It’s for those exact reasons many well-intentioned first-timers at entrepreneurship will want to skip over this part.

Sure, you asked your family and a few friends and they say your idea is great, so you’ve got a market, right? Wrong. You need to look back at the questions that help you with your vision and drill into them again.

What is it, and more important for your research, why would someone want it? What do I get from you that I can’t get from someone else or something else? How am I getting it and how is that delivery method better, cheaper, faster or easier for me?

These are all helpful questions to see where the market is for your business and what pain points you’ll need to solve for your market with your offering.

Create something you can sell

If you can’t solve a problem for your market, you aren’t going to make any sales large enough to sustain a business. It’s that simple. Make sure whatever your business is offering, it solves a problem, because you can market and sell the solution to that problem for a viable business.

Set up a sales funnel

If you don’t need the robust offering of a site such as Infusionsoft just yet for your business, look at sales funnel-specific software programs such as Lead Pages or Click Funnel. These plug and play into email service providers and payment processing vendors and can be a nice option for small businesses just starting out until they’re ready to scale to bigger platforms.

Set up an email opt-in

First, you’ll need an email service, such as AWeber or MailChimp, or if you have Infusionsoft or another bigger service provider such as Marketo, email will be part of the platform already. Once you have your email service, you’ll want to ensure there are plenty of places for people to opt-in to your email list on your website, on your landing pages from your sales funnel and anywhere else it’s appropriate. The key to a great, scalable business is a healthy, robust email app.

Start a Facebook page

Facebook is a great, free tool for spreading brand awareness and linking to your landing pages and website. If you create and curate really valuable content consistently, you’ll build up a following that can help drive your business and your brand.

Create valuable, shareable content

You can post your content on your website, syndicate it through services such as Rebel Mouse and post to your own Facebook page. However, if you want the word to really spread, make sure each piece you post is easily sharable so you can build organic traffic and word of mouth.

Refine, tweak and improve as you go

You’ll never be done, but follow the previous nine steps and you should be on your way to establishing your business and your plan of action. As you implement each step, remember that you’ll need to continuously learn from each part of the process to tweak and improve as you go. The more you learn and make corrections, the better your business will be positioned for success in the long term.

Most Profitable Small Businesses

Online Courses and Coaching

It has become easier to share your knowledge or expertise via online course platforms. If you are a subject matter expert or passionate about something, then you can convert it into a substantial income.

Offer online coaching classes to students, build a community to help while building your online coaching business. You can set up a Facebook page or even a podcast where you can reach out to people looking for online coaching classes.

There are also several online platforms, including Thinkific and Teachable, to help you get started quickly. You can register on these platforms and start coaching right away.

Dropshipping

If you have the ability to procure products in demand at lower prices, then you can start a lucrative dropshipping business by reselling those products at third-party sites like eBay or AliExpress. Dropshipping is a concept in which sellers procure products in bulk from suppliers and sell them further to the end-user.

Here’s a perfect breakdown of how dropshipping works:

For dropshipping business ideas, you need to do extensive market research and identify critical products in high demand and can be procured easily at discounted prices. Check high-selling products on the leading ecommerce website, including Amazon, to gauge the current trend.

Bookkeeping and Accounting

Accounting and bookkeeping are an unavoidable reality of business ownership. But for many entrepreneurs, money management is the very worst part of owning a business. Whether you’re a licensed CPA or just a QuickBooks wizard, you might be the perfect candidate to launch your own business by keeping your fellow entrepreneurs’ personal and small business finances in order. With a net profit margin of 19.8%, bookkeeping, accounting, tax preparation, and payroll services have long been some of the most profitable businesses for entrepreneurs.

As a bookkeeper, you can process invoices and payroll, compiling expense reports, and more. If you have a CPA license, you can help business owners file taxes, generate balance sheets and other accounting documents, and make your professional recommendations about your client’s bottom line.

Consulting

If you’ve been in the business world for a long time, folks may be clamoring for your knowledge and expertise within your industry. Why not turn all that know-how into a new career as an independent consultant?

You can be paid to speak at industry conferences or events, serve on a board of advisors for a fledgling business, or lend your expertise to shape the strategy of an existing business on a contract basis. Whatever your skillset, starting a consulting business is a great way to make the income of your dreams while working on your own terms.

Social Media Management

Most millennials were born and raised on social media. As customers, they expect a business to have a strong social media presence and to be responsive in social customer service.

However, although most fellow small business owners know that they need to engage in social media marketing, few have the necessary time or expertise to “do social media” well, let alone manage all of their social media accounts.

If you’re fluent in Twitter, live your life on Facebook, and have gotten every job you’ve ever had through LinkedIn, you might consider turning your social media expertise into your own solopreneur business venture, offering support to business owners who need help managing their brand’s social media platforms. There’s no doubt that in this day and age, starting a social media consulting agency can easily become one of the most profitable small businesses.

Marketing Copywriter

Similarly, if you’re particularly adept with words, you can use your talents to write copy for various companies’ marketing efforts. The content marketing industry is slated to be worth a whopping $412 billion by 2021.

Whether you’re coining a catchy slogan or writing an in-depth description of a company’s offerings, if you’re doing it as an independent contractor, then you know you’ll be earning a profit for your services, no matter what.

Virtual Assistant

You can use your excellent organizational skills to create an extra stream of income. Virtual assistants are in high demand by corporations, freelancers, and every kind of business.

It is also an excellent opportunity to know successful and influential people from different fields of work to build a vast professional network. At the same time, it also provides you the opportunity to work from anywhere in the world while developing your professional skills.

People are always looking for efficient Virtual Assistants on freelance job websites like Flexjobs.

Travel Consultant

If traveling is your passion and you are always updated about things like best airplane ticket options and hotel deals, then you fit the bill.

You can start by helping your family and friends, securing the best travel deals. It will help you earn free word of mouth publicity and kickstart the growth of your freelance travel consulting business.

Create pages on platforms like Instagram, Facebook, LinkedIn, and WhatsApp to promote your business and connect with people who want to leverage great deals. When you develop a solid follower base, you can also collaborate with travel agencies to cut exclusive deals for your customers.

To make it a full-time career, you can also consider earning a certification in travel consulting.

Interior Designer

People have become more aware and tasteful about how their homes look. There is always a need for an interior designer who can tell which color will suit your walls and what is the right place to put your armchair.

You can take inspiration from Pinterest, which offers plenty of interior designing ideas to take inspiration from. You can even start by pitching your expertise to people in your acquaintance to gain confidence before going starting officially.

Here is the list of free interior design courses you can opt for to get a formal education.

Freelance Content Writing

Content writers are in huge demand, especially for digital marketing purposes. If you have a knack for crafting engaging stories and writing articles, then you can turn your skills into a lucrative freelance writing business.

From website copy to blog posts and email newsletters, you can write content for a variety of things. Experienced freelancers earn anything between $1000 to $5000 in a week. You can also take up editing and proofreading work to help clients upload error-free work.

Freelance content writing offers you the opportunity to earn from any location.

If you are starting out, you can find work on websites like:

• Flexjobs
• Fiverr
• UpWork
• ProBlogger

Once you build your portfolio, you can even launch your own website where you can welcome inbound leads. Other than this, you can connect with potential clients on social media platforms like LinkedIn.

Create a Youtube Channel

Several YouTubers are making thousands of dollars by vlogging about their passion, skills, travel, food, reviews, and stand-up comedy videos, among others.

Pick a niche you are passionate about and have sufficient knowledge to create engaging and unique videos. The more entertaining content you post, the more views and subscribers you will gain.

Several successful YouTubers earn millions by posting videos. However, an average YouTube earns around $3 to $5 per 1000 views.

Before starting your YouTube channel, learn about YouTube guidelines and how to use its tools. Also, invest in a good camera and microphone to make quality videos for greater earning potential.

Translator

Your expert knowledge of another language can help you earn handsome money. Translators are always in demand, but good translators are rare to find.

You can land lucrative jobs if you know the correct application of grammar and spell the words correctly. There are thousands of jobs listed on Flexjobs for translators.

Ghostwriter

Ghostwriters might not get the credit for what they write, but they sure make a lot of money. Jeff Hadden has made millions just by writing for famous and successful people. He started writing as a side gig and ended up making a lucrative career out of it.

You can secure ghostwriting gigs on FlexJobs. Beginners can expect to earn anything between $15 to $30 per hour depending upon their quality of work. Once you gain experience and develop a portfolio, your remuneration can increase exponentially.

Learn the ethics and rules of ghostwriting before entering the arena.

Tailoring

Style and fashion are always a topic of discussion. Naturally, being a good tailor is a great business opportunity. Your expertise to design and make designer-clothes within a limited budget can help you get access to a wide array of customers.

According to Entrepreneur.com, the business of alteration and tailoring requires a minimal investment of $2000. But you always have the option to start small and build your business gradually.

You can take an online fashion designing course from Oxford Home Study to gain more technical expertise in clothing and styling.

Baking

Baking can make you a lot of money. However, you should have a knack to make scrumptious delicacies, then only you will be able to sell them at premium prices. People always give more value and preference to hand-made and gourmet baked products.

To get started, you also need to stock up some essential cooking equipment.

You can start by cooking something as simple as your mom’s perfect recipe for cookies to perfect your skills. Later, you can master a bunch of niche recipes to create your own USP and command premium rates on your products.

You can find free baking classes on Skillshare to master your baking skills further.

The Best Business for Beginners

Landscaping Business

Starting a landscaping business or lawn care business mainly just requires some equipment, transportation and a steady base of clients. So you don’t need to have business experience to get started.

Freelance Writer

If you have writing skills, you can get started with your own writing business fairly easily by offering your services to businesses on a freelance basis.

Blogger

You can also fairly easily start your own blog where you post about topics that match up with your own experience and expertise.

Home Cleaning Service

For those who enjoy cleaning, or at least don’t mind it, starting a house cleaning business can provide a pretty straightforward path to business ownership.

Child Care Service

If you’re a kid person, you can start a child care business out of your home or even offer babysitting services where you go to the family’s home.

Courier

A courier is one of the small business ideas that simply provides a service that delivers messages from one person to another. So you don’t need much in the way of supplies or experience in order to get started.

Web Designer

If you have knowledge or experience in web design, you can offer your services to clients and build your own business as a web designer.

House Painter

You can also take a more low-tech approach and offer services as a house painter for local homeowners or even businesses.

Dog Walker

If you enjoy spending time with four-legged friends, you can start a business as a dog walker. Offer services to pet owners who don’t have enough time to walk their dogs regularly.

Baker

Starting a food service business is one of the small business ideas that can be pretty involved for a beginner. But if you enjoy making food and want to build your first business around it, you can start a baking business. As a baker, you can sell products or custom creations for events out of your home kitchen.

The Business Services in High Demand

Marketing

As Dallas Mavericks owner Mark Cuban famously said: “no sales, no company.” For most businesses, marketing is the key to success. However, many small business owners are not proficient at marketing or don’t have the time.

A good marketing consultant can develop strategies to boost existing sales and take a business to the next level.

If you have a flair for marketing and a track record of helping businesses achieve their sales goals your services will always be in high demand. According to the Bureau of Labor Statistics, the need for advertising and marketing managers is expected to grow by 10% between 2016 and 2026.

Technology Services

With the continuing rise in the use of various technologies in the workplace, there is a strong demand for skilled technologists to provide on-demand services such as:

• Consulting on computer purchases
• Installation and repair
• Systems upgrades
• Smartphone repair
• Hardware/software lessons and training
• Network design and implementation
• Cloud services consulting
• Web page design and maintenance
• Custom software development
• Social media consulting

If you have good “techie” skills why not consider providing your services to businesses?

Training

Statistics show that proper training and development of employees helps boost morale and improves customer retention. Unsurprisingly, training is one of the most common on-demand services for business. 

Business training encompasses a huge range of disciplines, such as:

• Software
• Effective communication
• Time management
• Customer service
• Negotiating
• Industry regulations
• Accounting/bookkeeping
• Marketing
• Project management
• Technical training on equipment or machinery

If you have teaching skills and expertise in one or more business topics, you might consider offering professional training services to businesses.

Accounting and Finance

Bookkeeping and accounting are two of the most commonly used on-demand business services. Bookkeepers perform general accounting duties such as data entry, payroll processing, and banking reconciliation.

Accountants typically operate at a more analytical level, preparing and analyzing financial reports, providing advice on improving profitability, and preparing and submitting tax returns.

Temporary Staffing

For many businesses staffing needs tend to fluctuate and it is less expensive in the long run to employ temporary workers when needed rather than hiring full-time employees. 

While this has historically been the case in industries such as retail or construction that have higher seasonal demands for workers, it is now becoming more common in other fields such as healthcare and education.

If you have a trade or skill, sufficient experience, and prefer temporary employment your services may be in demand. For example, according to the Bureau of Labor Statistics, employment in the healthcare field is expected to grow by 18% from 2016 to 2026.

What is Business Model

A business model is a company’s plan for making a profit. It identifies the products or services the business will sell, the target market it has identified, and the expenses it anticipates.

A new business in development has to have a business model, if only in order to attract investment, help it recruit talent, and motivate management and staff. Established businesses have to revisit and update their business plans often or they’ll fail to anticipate trends and challenges ahead. Investors need to review and evaluate the business plans of companies that interest them.

Types of Business Models

There are as many types of business models as there are types of business. Direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrids as well, such as businesses that combine internet retail with brick-and-mortar stores, or sporting organizations like the NBA.

Within these broad categories, each business plan is unique. Consider the shaving industry. Gillette is happy to sell its Mach3 razor handle at cost or lower in order to get steady customers for its more profitable razor blades. The business model rests on giving away the handle to get those blade sales. This type of business model is actually called the razor-razorblade model, but it can apply to companies in any business that sells a product at a deep discount in order to supply a dependent good at a considerably higher price.

What is Business Development

Business development can be summarized as the ideas, initiatives and activities aimed towards making a business better. This includes increasing revenues, growth in terms of business expansion, increasing profitability by building strategic partnerships, and making strategic business decisions.

However, it’s challenging to boil down the definition of business development. First, let’s look at the underlying concept and how it connects to the overall objectives of a business.

Due to the wide open scope of business development and activities, there are no standard practices and principles. From exploring new opportunities in external markets, to introducing efficiencies in internal business operations, everything can fit under the business development umbrella.

Those involved in business development need to come up with creative ideas, but their proposals may prove to be unfeasible or unrealistic. It’s important to be flexible. Employees charged with business development should try to seek out and take constructive criticism, and remember that it’s a process. 

The Business with High Profit Margin

Real Estate Sales and Leasing

The real estate market has rebounded significantly since 2008, offering a wealth of both affordable and luxury housing options nationwide. This is especially true in the rental market, as the millennial generation is not purchasing homes at the same rates as preceding generations.

In fact, there are more renters today than any time since 1965, demonstrating a booming market with no signs of slowing. While home purchases among millennials may not be at the levels of past generations, the buying and selling real estate isn’t without potential, either. Sooner or later, most people will need to buy a home or commercial property, putting you in position to profit.

With an average net profit margin of 17.4 percent for leasing and 14.8 percent in sales, real estate has a lot to offer. While management offices, sales reps, brokers, and landlords must display diverse skills – accounting, payroll, management, repair, scheduling, marketing, and maintenance abilities are all key elements in a successful real estate office – no specific degrees or backgrounds are required to succeed in real estate. Overhead costs tend to be low as well; agents can work from almost anywhere.

Legal Services and Law Firms

The legal industry is indispensable across a multitude of personal and professional areas, providing support for individuals and businesses alike. Sooner or later, almost everyone will need a lawyer, as the law isn’t an area in which the amateur can practice. Law firms, much like accounting services, can provide diverse skills, including:

• Criminal law
• Business law
• Family law
• Trusts and estates
• Constitutional law
• Intellectual property law
• Personal injury law
• Employment law

Due to the similarities between accounting and law in terms of universal need, it’s no surprise the average net profit margin for legal services and law firms in the small business sector came in at 17.4 percent in 2016. However, like accounting, the barrier to entry in law is extremely high.

Attorneys must attend a four-year undergraduate program, go to law school, and then pass the state bar exam. Additionally, some attorneys only practice in narrow fields, so a firm with multiple focuses may require additional staff and thus require higher human capital costs.

Accounting Services

As one of the core business functions supporting nearly every kind of individual and corporation, accounting services are highly in demand – and clients are willing to pay. With services that encompass business outsourcing, personal financial planning, bookkeeping, and tax preparation, this dynamic field offers significant potential. There are next to no overhead start-up costs for professionals outside of office space, software, minimal manpower, and electronics.

The average net profit for accounting services companies comes in at 18.3 percent, offering an environment with lots of chances for gain and plenty of margin for error. A universal need, accounting services remains a consistently positive industry for business growth. However, the barriers to entry in accounting are quite high.

Successful accountants in every service area often have a high level of education, at minimum an undergraduate degree. Those with a more advanced skill set may have a CPA license or an IRS Enrolled Agent certification. While more challenging to obtain, professionals with these kinds of additional qualifications can demand higher rates and will subsequently generate higher revenue.

Warehouse and Storage

Storage facilities are essential everywhere and can be quite coveted in larger cities, like New York or San Francisco. Serving both residential customers in a self-storage format or companies unable to purchase their own warehouse spaces, having ample space to store goods and possessions offers compelling business opportunities.

With an average net profit margin of 11.6 percent, warehouse and storage companies are able to turn building ownership into a lucrative business. While initial costs can be steep – even in rural areas, warehouse spaces are rarely cheap – the initial investment can be easily offset by rental revenue. In many applications, renting warehouse space can be fairly hands-off; clients pay rent and are then free to do with the available space that they will. This makes the time commitment in your business minimal.

Additionally, warehouses may require some skilled labor, like forklift operators, but for the most part, warehouse employees are unskilled and therefore easy to hire and cost-effective to employ. Costs in the warehouse typically arise from expenses related to renting machinery, such as forklifts, or purchasing equipment, like industrial stairways that will make your storage space more usable.

Food Truck Operation

Often seen as the new frontier in food service, food trucks are making a mark in virtually every major metro area. Offering a convenient and low-cost alternative to sit-down restaurants that generally exceed fast food and fast casual eateries in terms of quality, food trucks are a trend that shows no sign of dying down. Today, there are over 4,000 food trucks in operation, comprising an industry valued at $1.2 billion.

Starting a food truck is a relatively low-cost endeavor, with the lowest estimates coming in under $30,000. While a truck can be expensive, a fully outfitted food truck still requires significantly less capital – both in the beginning and throughout operations – than a physical restaurant.

While a traditional restaurant is stuck in its bricks, food trucks can extend their reach and travel to different neighborhoods and events to gain a cult-like following for their latest dessert-based empanada treat. Best of all, they can embrace modern Point of Sale (POS) technology like an iPad cash register to ring up sales and track customers.

While no education is technically required to start a food truck, successful enterprises are often run by practiced chefs who can compose and execute a desirable menu.

10 Most Profitable Industries in the US in 2020

The 10 Global Biggest Industries by Revenue

The Richest Companies in the World 2020

What are Business Rates

Business rates are a tax on property used for business purposes. They’re charged on properties like offices, shops, pubs, and warehouses – most non-domestic properties will attract business rates. They may also be charged where only part of a building is used for non-domestic purposes.

How much are business rates?

Business rates are calculated using a property’s ‘rateable value’. The rateable value is a property’s estimated value on the open market. The last revaluation, conducted by the Valuation Office Agency (VOA) and which came into effect on 1 April 2017, refers to values as of 1 April 2015. Revaluation usually happens every five years.

It’s possible to estimate your business rates by multiplying your property’s rateable value by the relevant number

Business rates calculator

If you want to estimate your business rates bill, you’ll need to find out your property’s rateable value.

This enables you to find the correct multiplier, which will depend on the rateable value. Then, deduct any reliefs you’re entitled to.

You can use the government’s business rates calculator.

What is Business Rate relief?

There are a range of reliefs available for some properties. The most useful for small firms is the small business rate relief. This is available if your property has a rateable value of less than £15,000, and generally if your business only uses one property.

Full relief is available on properties with a rateable value of £12,000 or less. For those between £12,001 and £15,000, relief goes down gradually from 100 per cent to zero per cent.

If you’re a small business but you don’t qualify for small business rate relief, your bill will still be worked out using the lower small business multiplier (for properties with a rateable value below £51,000).

There are other business rates reliefs available, including the rural rate relief and charitable rate relief. You can read more about these on the government website.

Businesses For Sale

Buying a small business is an awesome way to become a business owner. If the company is profitable, your risks are much lower than if you backed an unproven startup.

There are many ways you can find these hidden gems — the local paper, online sites, and business brokers. But we’re going to focus on where you can find them online.

1. BizBuySell.Com

BizBuySell.com will give you the options to buy a business, sell a business, and get help with financing.

To narrow down your results, you can search by categories, states, and countries. You can even set your minimum and maximum price range.

You can search by business type and the amount you’re willing to invest. If you need a business broker, this site allows you to find one of those, too.

You can even set up email alerts for listings that match your searches. This way, you’re looking even when you aren’t online.

2. BizQuest.Com

BizQuest.com actually lets you advertise a little while also letting you look for businesses for sale. You can also find business brokers by location, business type, and industry.

The ads that you post are sent to partner websites like The Wall Street Journal and New York Times. BizQuest also gives you the option to browse listings in top cities as well as the most popular franchises and industries.

3. BusinessBroker.Net

BusinessBroker.Net has a ton of listings just waiting for you to sift through. You’ll be able to search for businesses or franchises, find brokers, and see listings by industry and location.

So, it might not be able to help you narrow your search down quite as much as you want, given how many listings there are, but it does have a financing and loan center. You will be offered professional help to guide you with all your big business-purchasing decisions.

4. DealStream.Com

DealStream.Com is another one that will allow you to post ads for what you need. A huge variety of active businesses around the world use it, too. This means that it’s good if you’re trying to buy internationally.

You can post your ads for free and connect with important people like experienced entrepreneurs, investment bankers, and business brokers.

An important step when looking for businesses for sale is getting advice. This site will allow you to get it from people who have been right where you are.

5. BusinessesForSale.Com

BusinessesForSale.Com’s name really makes sense for them, considering the huge amount of business listings they have available in the United States and around the world. This includes franchises and makes it one of the best places to go if you want to buy an international business.

You can search for a business by sector, location, and business requirements such as “work from home.”

If you go with BusinessForSale, you will also be able to get email alerts and a service directory if you need an accountant, broker, or lawyer.

6. LoopNet.Com

LoopNet probably has the largest amount of listings available, making it the most reliable resource when it comes to discovering business for sale in your region. It even has an app form that’s available in both Google Play and App Store. You’ll be able to look for listings whenever you want, no matter where you are.

Not only is LoopNet perfect if you have a busy schedule, but it’s also partnered with commercial real estate firms like Century21, Cushman & Wakefield, CBRE, Sperry Van Ness, and Re/Max Commercial.

If you’re looking to sell your current business, LoopNet will give you the opportunity to list your firm. Alternatively, if you are looking to sell or transfer your business, you should read more on how to do that to make it easier on yourself.

7. BusinessMart.Com

BusinessMart.com has both businesses and franchises available, as well as resources and services to help you get the funding you need to buy a new business.

You can also search by location and business category, and search franchises by your available capital. If you’re interested in selling your business, then BusinessMart offers ad listings that will reach countless buyers.

Their site also allows for potential buyers and small business owners to receive quotes from vendors for services like phone systems and credit card processing to help grow a business.

Free Business Name Generator

Shopify Business Name Generator

Use Shopify’s business name generator to search for business names and check domain availability. Once you find the perfect business name, you can select the domain name that fits your business and your personality.

NameStation

To use NameStation, enter some keywords and view a few thousand combinations with synonyms, similar words and categorized wordlists. Save your favorites and generate similar names. NameStation also provides crowdsourced name contests where you can get the community to help you find the best business name.

Anadea Business Name Generator

Use this free business name generator to help you find the best name for your business, website or even your app. Just enter in some keywords related to your business to start generating name suggestions.

Business Name Generator (BNG)

To use this name generator, just input a word or words, and it generates a list of possible business names. The tool will also identify which domain names are available for each possible business name.

Namesmith

Namesmith helps you brainstorm name ideas by generating suggestions from (up to five) keywords. Namesmith features many different name suggestion algorithms from your keywords, including purposeful misspellings, adding suffixes/prefixes, and creating fantasy names based on what you’ve entered.

Business Plan

A business plan is a written description of your business’s future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you’ve written a plan, or at least the germ of one. Business plans are inherently strategic.

The six components of a business Plan

Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential topics. Here’s a quick overview of each topic. There are a lot more details and instructions for each step later in this guide.

1. Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.

2. Opportunity

The opportunity section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition?

3. Execution

In the execution chapter of your business plan, you’ll answer the question: how are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success.

4. Company and management summary

Investors look for great teams in addition to great ideas. Use the company and management chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.

5. Financial plan

Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan, but you’ll definitely want to start with a sales forecast, cash flow statement, income statement (also called profit and loss) and your balance sheet. 

6. Appendix

If you need more space for product images or additional information, use the appendix for those details.

Business Plan Templete

Find more details about writing a business plan in the video below

What is a Businesss Account

A business needs a system to manage its money. Business accounts are used to track the cash balance, money owed to the business, money owed to creditors and payroll paid to employees. The number of accounts a business needs will vary, but business accounts are universal for all businesses.

Checking Account

The business checking account is the backbone of a business. From this account payroll is deducted, bills are paid and sales are deposited. This account is also generally the first relationship business will have with a bank. Proper maintenance of this account can forge a relationship that could prove beneficial if the business needs funding for expansion or a line of credit.

Merchant Accounts

Businesses that accept credit cards will need a merchant account for payments made via credit cards. Merchant accounts also accept online payments that might be made through a credit card or PayPal. A merchant account allows the business to accept all forms of payment, an attractive and convenient benefit to customers. Accounts are set up through a bank and a third-party processor. A business with an online presence will find a merchant account especially helpful.

Accounts Payable

Accounts payable are a listing of accounts the business owes to its creditors. Examples of these type of accounts include mortgages, car notes and lines of credit extended to the business by other businesses. This account is different from typical business expenses because they are long-term or revolving accounts. Payments on these accounts are typically disbursed from the business’ checking account.

Receivable Accounts

Receivable accounts are the opposite of payable accounts; these accounts represent money owed to the business by other businesses. For example, if the business extends credit to its customers, the amounts owed to the business is receivable. Money is not credited to this account, instead, payments on a receivable are deposited into the business’ checking account. This account, along with the payable account, are informational accounts.

Payroll Account

When a business has employees, money from the business checking account is moved into the payroll account. Using separate accounts to pay employees makes tracking the amounts easier for general accounting and tax purposes. Not all businesses use a specific payroll account but instead elect to deduct the total amount of payroll from the business account, but from an accounting standpoint, using the payroll account makes things easier.

Who is a Business Analyst

Business analysts (BAs) are responsible for bridging the gap between IT and the business using data analytics to assess processes, determine requirements and deliver data-driven recommendations and reports to executives and stakeholders.

BAs engage with business leaders and users to understand how data-driven changes to process, products, services, software and hardware can improve efficiencies and add value. They must articulate those ideas but also balance them against what’s technologically feasible and financially and functionally reasonable. Depending on the role, you might work with data sets to improve products, hardware, tools, software, services or process.

What does a Business Analyst Do?

The primary job responsibility of Business Analyst is to communicate with all stakeholders & to elicit, analyze and validate the requirements for changes to business processes, information systems, and policies.

A professional business analyst plays a big role in moving an organization toward efficiency, productivity, and profitability.

Before we jump into the tutorial, we will see some basic perspective of a Business Analyst to help the organization succeed. The foremost priority for any business analyst will be to try understanding following things

• Understand what business does and how it does
• Determine how to improve existing business processes
• Identify the steps or tasks to support the implementation of new features
• Design the new features to implement
• Analyze the impact of implementing new features
• Implement the new features

Business analyst skills

The business analyst position requires both hard skills and soft skills. Business analysts need to know how to pull, analyze and report data trends, and be able to share that information with others and apply it on the business side. Not all business analysts need a background in IT as long as they have a general understanding of how systems, products and tools work. Alternatively, some business analysts have a strong IT background and less experience in business, and are interested in shifting away from IT to this hybrid role.

According to the IIBA some of the most important skills and experience for a business analyst are:

• Oral and written communication skills
• Interpersonal and consultative skills
• Facilitation skills
• Analytical thinking and problem solving
• Being detail-oriented and capable of delivering a high level of accuracy
• Organizational skills
• Knowledge of business structure
• Stakeholder analysis
• Requirements engineering
• Costs benefit analysis
• Processes modeling
• Understanding of networks, databases and other technology

Business analyst salaries

The average salary for an IT business analyst is $67,762 per year, according to data from PayScale. The highest-paid BAs are in San Francisco, where the average salary is 28 percent higher than the national average. New York is second, with reported salaries 18 percent higher than the national average; Boston comes in third, with a 7 percent higher annual pay.

PayScale offers data on similar job titles that fall under the category of business analyst. The average salaries for those positions are as follows:

Business and Property Courts

Business and Property Courts is an umbrella term for a number of the specialist jurisdictions of the High Court of England and Wales in operation from 2 October 2017. The name Business and Property Courts (B&PCs) is intended to give the specialist jurisdictions an intelligible user-friendly name, while preserving the existing brands of the individual courts. 

In the High Court, the B&PCs encompass the following specialist courts and lists:

• The Commercial Court (Queen’s Bench Division).
• The Admiralty Court (Queen’s Bench Division).
• The Circuit Commercial Court (formerly the Mercantile Court) (Queen’s Bench Division).
• The Technology & Construction Court (Queen’s Bench Division).
• The Financial List (Queen’s Bench Division / Chancery Division).
• The Business List (Chancery Division). This includes all the cases that were previously issued in the Chancery Division, including real property cases, pensions cases, financial services cases (outside the Financial List), and regulatory cases.
• The Insolvency and Companies List (with the further option of the Insolvency or Companies sub-lists) (Chancery Division).
• The Intellectual Property List (Chancery Division). This includes the Patents Court and the Intellectual Property & Enterprise Court.
• The Property, Trusts and Probate List (Chancery Division).
• The Competition List (Chancery Division).
• The Revenue List (Chancery Division).

What is Business Administration

Business administration, refers to the programs available in colleges. Specifically, programs that teach the basic principles and practices of a business.

The term also refers to the management of a business, i.e., management in all aspects. This includes finance, marketing, human resources, and accounting. It also includes business operations.

“Business administration is the process of organizing the business’s personnel and resources to meet business goals and objectives.”

“These processes include human resources, as well as operations management, financial management, and marketing management.”

Preparing for a Job in Business Administration

1. Develop good problem solving, communication and interpersonal skills.
2. Acquire computer skills.
3. Consider co-op, internship, or part-time work in area of interest.
4. Get sales experience.
5. Gain leadership experience by participating in campus or community clubs and organizations.
6. Consider taking additional courses in human resource management, operations management, or small business management.

A business administrator is usually somebody who has studied business administration and is in charge of the day-to-day operations of a company. They are also in charge of the planning of long-term strategies and projects.

Common day-to-day operations may include:

• Working individually and as a team.
• Organizing and supervising staff members.
• Hiring new people.
• Motivating employees.
• Reporting and overseeing the main aspects of the business.

Business administration career prospects

As a business administrator, you can reach top positions. You can, for example, eventually become a company’s CEO, CFO, or General Manager. CEO stands for Chief Executive Officer. CFO stands for Chief Financial Officer.

When starting this career, people qualify for basic management positions and gradually make their way up the corporate ladder.

Apart from academic qualifications, a good business administrator must have certain skills. Adaptability, being able to multi-task successfully, and leadership skills, for example, are vital. You must also be a good leader who can motivate people.

If you are considering starting a degree in Business Administration, bear in mind that it comprises many areas of business.

Courses such as marketing, finance, accounting, human resources, and ethics are common. The course outline also includes project management and global business.

A Business Letter Format

A business letter is a formal document often sent from one company to another or from a company to its clients, employees, and stakeholders, for example. Business letters are used for professional correspondence between individuals, as well.

Although email has taken over as the most common form of correspondence, printed-out business letters are still used for many important, serious types of correspondence, including reference letters, employment verification, job offers, and more.

Realize that your recipient reads a significant amount of correspondence on a regular basis and will favor well-executed letters that are free of typos and grammatical errors.

What to Include in the Letter

Make the purpose of your letter clear through simple and targeted language, keeping the opening paragraph brief. You can start with, “I am writing in reference to…” and from there, communicate only what you need to say.

The subsequent paragraphs should include information that gives your reader a full understanding of your objective(s) but avoid meandering sentences and needlessly long words. Again, keep it concise to sustain their attention.

If, for example, you want the reader to sponsor a charity event, identify any overlap with their company’s philanthropic goals. Convince the reader that helping you would be mutually beneficial, and you will increase your chances of winning their support.

Sections of a Business Letter

Each section of your letter should adhere to the appropriate format, starting with your contact information and that of your recipient’s; salutation; the body of the letter; closing; and finally, your signature.

Your Contact Information

• Your Name
• Your Job Title
• Your Company
• Your Address
• City, State Zip Code
• Your Phone Number
• Your Email Address

The Date

• The date you’re penning the correspondence

Recipient’s Contact Information

• Their Name
• Their Title
• Their Company
• The Company’s Address
• City, State Zip Code

The Salutation

• Use “To Whom It May Concern,” if you’re unsure specifically whom you’re addressing.
• Use the formal salutation “Dear Mr./Ms./Dr. [Last Name],” if you do not know the recipient.
• Use “Dear [First Name],” only if you have an informal relationship with the recipient.

The Body

• Use single-spaced lines with an added space between each paragraph, after the salutation, and above the closing.
• Left justify your letter (against the left margin).

Closing Salutation

Keep your closing paragraph to two sentences. Simply reiterate your reason for writing and thank the reader for considering your request. Some good options for your closing include:

•  Respectfully yours
•  Yours sincerely
•  Cordially
•  Respectfully

If your letter is less formal, consider using:

• All the best
• Best
• Thank you
• Regards

Your Signature

Write your signature just beneath your closing and leave four single spaces between your closing and your typed full name, title, phone number, email address, and any other contact information you want to include. Use the format below:

What Does Business Casual Attire Mean?

Business casual sounds like a breeze. After all, with this dress code, you won’t have to worry about what to wear to work, right? Not quite. 

In fact, this dress code guideline is a frequent source of confusion for workers. And it’s not their fault — there really isn’t a clear, standardized definition. Business casual may mean different things in different companies, cities, and industries. And on top of that, understanding the subtle differences between “business” and “business casual” isn’t easy.

Note: Dressing in shorts and a t-shirt or a sundress and sandals is too casual. But wearing a full suit is overly formal. 

When in doubt, it’s better to err on the side of dressing too formally, rather than too casually. But where’s the line? Get advice on appropriate business casual attire for men and women, along with tips on what to wear — and what not to wear — in the office and during job interviews.

What is Business Casual for Women

Appropriate business casual outfits for women include a skirt or dress slacks, blouse, sweater, twinset, jacket (optional), and hosiery (optional) with closed-toe shoes. Sandals or peep-toe shoes may be permissible in some offices but save flip-flops for the weekend. 

Any working woman should have the following staples in her wardrobe:

• Khaki, corduroy, twill, or cotton pants or conservative-length skirts
• Sweaters, twinsets, cardigans, polo/knit shirts
• A professional dress — try a sheath silhouette

Keep in mind that solid colors are generally preferable to busy or bold patterns. 

What is Business Casual for Men

For men, appropriate business casual attire is dress slacks or chinos, a button-down shirt, dark socks, and dress shoes. Avoid wearing polo shirts to an interview, even if they are acceptable for the job in question. Do not wear jeans or shorts. Athletic socks are also a no-no. 

The following will help you solidify good standing in a new position:

• Khaki, gabardine, wool, or cotton pants, neatly pressed
• Cotton long-sleeve, button-down shirts, pressed
• Sweaters
• Leather shoes, in black and brown
• Leather belt, in black and brown
• A selection of ties

What is a Business Organisation

The term business organization describes how businesses are structured and how their structure helps them meet their goals. In general, businesses are designed to focus on either generating profit or improving society.

When a business focuses on generating profits, it is known as a for-profit organization. When an organization focuses on improving the social good through the arts, education, health care, or some other area, it is known as a nonprofit (or not-for-profit) organization and is not typically referred to as a business.

There are different categories of business organizations that relate to how the business is established, owned, and operated. The basic categories of business organization are sole proprietorship, partnership, and corporation. Each type of business organization has benefits as well as disadvantages.

For example, a sole proprietor of a small business is able to operate independently of much of the government regulation that affects larger businesses, but he or she is liable (responsible) for all financial risks of the business. Therefore, the owner of a small grocery store is able to keep all the profits for herself, but she is also liable for all of her business debts, even if she must repay a debt with her personal finances.

No matter how a business is organized, it takes on certain risks as it operates. One way to minimize risk is for a business to use its assets and investments wisely, whether these are equipment, knowledge, property, or relationships. The more efficiently a business uses its assets, the greater the chance that it will make a monetary profit.

Business organization affects how business is treated under the law. State and federal governments provide incentives and rules for every type of business organization. Profitability in the industry helps a country’s economy grow, so governments generally support corporations by passing laws that protect investors from liability for the debts of the business.

Six Types of Business Organizations

Sole Proprietorship

A sole proprietorship, also known as a consultant, independent contractor, or freelancer is a business owned by a single person. Sole proprietorships are “the most common form of business organization” (Beatty, 2006, p. 755).

Pros and cons of a Sole Proprietorship

Pros

Simplicity in retirement plans

Easiest form of business to set up and dissolve

Avoids the expense of forming a partnership or corporation

Not required to file a separate tax return (although it will be on a separate schedule)

No need to register with the government (a few states and local governments require sole proprietorships to possess a business license)

Cons

You are on your own

Unlimited personal liability for all debts of the business

Limited financing options (cannot raise capital from outside investors)

Self-employment taxes of 15.3% on the first $106,800 of earnings

Business dissolves when owner dies or sells rights to business (new owner must start new sole proprietorship)

General Partnership

A general partnership is formed with two or more partners as business co-owners.

Pros and cons of a General Partnership

Pros

You have someone to assist you in business matters allowing more time away from the business

Partners provide additional financial backing as opposed to going it alone in a sole proprietorship.

Simplicity and flexibility

Cons

Loss of total control resulting in decision making being done by the team instead of by the individual

Each of the partners will have unlimited personal liability for all debts of the business

Business income and expenses reported on a separate tax return

Limited Partnership

A limited partnership is a partnership formed by two or more people having at least one general partner and one limited partner.

Pros and cons of a Limited Partnership

Pros

Limited liability for limited partner

Easy to form

Perpetual existence – business continues as partners come and go

Only one partner is required to be a general partner

Cons

Selling of one’s partnership interest is only allowed if the partnership agreement permits it.

Reinvested profits are taxed at the owners’ highest marginal tax rate

Sharing profits with others

Greater expense to form than a general partnership

General partners liable for debt

“C” Corporation

Pros and cons of a “C” Corporation

Pros

Limited liability

Greater flexibility than a “S” corporation

Multiple classes of stock

No restrictions on eligible owners

Some states have no corporate tax

Section 179 expensing election considerably lucrative (“S” corporations are limited to just one amount)

Unlimited number and type of shareholders – beneficial when planning a stock offering or requiring many investors

Ease of selling or transferring stock

Some states require no disclosure of corporate owners

$50,000 of group term-life insurance coverage tax free to the employee

Tax-free accident and health insurance to the employee

Perpetual existence – business can continue without their founders

May elect to use a fiscal instead of a calendar tax year (ability to shift income between taxable years)

Cons

Double taxation – profits taxed at the corporate level and dividends at the shareholders level

Greatest startup cost (incorporation fees, etc.)

Greatest cost of filing yearly-required paperwork (taxes, business license, etc.)

“S” Corporation

An “S” corporation is a “C” corporation that has elected for “S” corporation tax status. With an “S” corporation, you receive the limited liability of a corporate shareholder with the benefit of paying taxes as a sole proprietor or partner.

Pros and cons of an “S” Corporation

Pros

Limited liability

Pass-through of losses – corporate losses can pass through to shareholders unlike in a “C” corporation (no double taxation)

No federal income taxes

No shareholder FICA tax on net income (unlike self-employment taxes of 15.3% on the first $106,800 of earnings for a sole proprietorship)

Perpetual existence – business can continue without their founders

Simpler than a “C” corporation

Cons

Subject to some of the same requirements of “C” corporations (keep corporate minutes, hold shareholders and directors meetings, allow votes on major corporate decisions by shareholders)

Must maintain financial exclusivity between private and corporate holdings to avoid personal financial liability

State corporate income tax return may need to be filed

Must have at least one shareholder

Limited to a maximum of 100 shareholders (no foreign shareholders)

All shareholders must agree to the election of “S” corporation status

There can only be issuance of common shares which can limit capital raising efforts

All gains and losses must be passed through to the shareholder’s stock stake in the company proportionately

Annual state franchise fee or tax

Less flexibility than a “C” corporation

Must use calendar year for tax reporting purposes (few exceptions)

Limited Liability Company

A limited liability company (LLC) is a hybrid between a partnership and corporation.

Pros and cons of a Limited Liability Company

Pros

Limited liability

Hybrid between a partnership and corporation

Owners can report their share of profits or losses on their individual tax returns

Can utilize pass-through taxation (if the owners decide to treat the LLC as a sole proprietorship or a partnership)

Distribution of earnings among members is flexible – profits and losses don’t have to be distributed in proportion to ownership

Can be managed by owner or outside manager

Can be single owner (a few states require more than one owner)

Cons

Generally required by state law to have written operating agreements – rights and duties of the members much like a partnership agreement

Limited tax benefits versus sole proprietorship or general partnership

No perpetual existence (most states require the operating agreements of an LLC to set a limit to the company’s existence.)

Requirements must be met to sell ownership interests

The Role of Management in Business

Management is the process of guiding the development, maintenance, and allocation of resources to attain organizational goals. Managers are the people in the organization responsible for developing and carrying out this management process. Management is dynamic by nature and evolves to meet needs and constraints in the organization’s internal and external environments.

In a global marketplace where the rate of change is rapidly increasing, flexibility and adaptability are crucial to the managerial process. This process is based in four key functional areas of the organization: planning, organizing, leading, and controlling. Although these activities are discussed separately in the chapter, they actually form a tightly integrated cycle of thoughts and actions.

From this perspective, the managerial process can be described as (1) anticipating potential problems or opportunities and designing plans to deal with them, (2) coordinating and allocating the resources needed to implement plans, (3) guiding personnel through the implementation process, and (4) reviewing results and making any necessary changes.

This last stage provides information to be used in ongoing planning efforts, and thus the cycle starts over again. The four functions are highly interdependent, with managers often performing more than one of them at a time and each of them many times over the course of a normal workday.

The Importance Of Management

The importance of management can never be underestimated or ignored as it’s a proven fact that the success of a company entirely depends on how well it is managed.

Here’s why management is important for any business:

Aligning Goals

A company consists of employers and several employees who work together. Everybody has their own goals. Management gives them a common direction to achieve their goal together.

For example:

The goal of a company is to maximize their output and profit. The goal of an employee is to get the most out of the company in terms of both salary and recognition. Management helps in aligning these two goals by using effective employee motivation strategies which makes him give his best to the organisation.

Best Utilisation Of Resources

The proper utilisation of resources is really important for an organisation which operates in a competitive environment. Management helps in the division of work and prevents the employees from under-performing or getting overburdened with work.

Every employee has their own field where they expertise. Through management, the employees are given work related to their field of knowledge. It increases the speed and accuracy of work.

Moreover, management also makes that the work is standardised so as to reduce wastage when it comes to other resources.

For example:

Management makes sure that the person who is good in sales is given work in the sales department only and not in any other department. Also, it provides him with proper training to make sure that not much time isn’t wasted on making him learn during actual sales visits.

Reducing Cost

Management helps to combine all the factors of productivity and organise them. It involves the best utilisation of resources which prevents wastage of time and efforts, which eventually reduces the wastage of money. Therefore management gives better ROI (Return on investment).

Reduction in cost helps in getting a good position in the market and keeps the company ahead in the competition.

Increasing Efficiency

The main aim of the company is to get the most efficient result i.e. to achieve maximum profit by maximizing the output and minimizing the input.

Management involves the optimal utilisation of resources and helps in cost reduction. These two factors consequently increase the efficiency of the company.

Surviving In A Dynamic Environment

A company operates in a dynamic environment where a number of external factors like political, social, economical etc. affect its functioning. This makes it almost obligatory for the company to be flexible and change its short term goals and working styles according to the changing environment.

Management helps the company to adapt to the changing environment in order to remain successful.

For example:

The leader in fast food, McDonald’s, had to make many changes in its menu to survive in the Indian market which was dominated by vegetarians.

Tackling Competition

Proper management always aims at sound functioning of the organisation and reduces the failure rates. Thus, helping to overcome tough situations and keeps the organisation ahead of competitors.

In the modern business environment, one can pursue their organisation in large markets through proper management.

Essential For The Welfare Of The Society

Good management not only reduces difficulty of the task but also prevents the wastage of costly and rarely available resources.

Management helps in providing good quality of services and products which increases the living standard. It also leads to more profit of the organisation and thus providing fair wages and generating more employment opportunities.

Concept of Business Environment

The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise.  These include customers, competitors, suppliers, government, and the social, political,  legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly.

Thus, business environment  may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which are uncontrollable in nature and affects the business decisions of a firm.

A business firm is an open system. It gets resources from the environment and supplies its goods and services to the environment. There are different levels of environmental forces. Some are close and internal forces whereas others are external forces. External forces may be related to national level, regional level or international level. These environmental forces provide opportunities or threats to the business community.

Every business organization tries to grasp the available opportunities and face the threats that emerge from the business environment. Business organizations cannot change the external environment but they just react. They change their internal business components (internal environment) to grasp the external opportunities and face the external environmental threats.

It is, therefore, very important to analyze business environment to survive and to get success for a business in its industry. It is, therefore, a vital role of managers to analyze business environment so that they could pursue effective business strategy.

A business firm gets human resources, capital, technology, information, energy, and raw materials from society. It follows government rules and regulations, social norms and cultural values, regional treaty and global alignment, economic rules and tax policies of the government. Thus, a business organization is a dynamic entity because it operates in a dynamic business environment.

Importance of Business Environment

There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively.  As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more  specific, proper understanding of the social, political, legal and economic environment  helps the business in the following ways:

• Identifying Firm’s Strength and Weakness: Business environment helps to identify  the individual strengths and weaknesses in view of the technological and global  developments
• Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully.
• Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities.
• Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.
• Image Building: Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working.
• Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly.

Concept of Risk Management

Risk management is the process of identifying, assessing and controlling threats to an organization’s capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. 

IT security threats and data-related risks, and the risk management strategies to alleviate them, have become a top priority for digitized companies. As a result, a risk management plan increasingly includes companies’ processes for identifying and controlling threats to its digital assets, including proprietary corporate data, a customer’s personally identifiable information (PII) and intellectual property.

Every business and organization faces the risk of unexpected, harmful events that can cost the company money or cause it to permanently close. Risk management allows organizations to attempt to prepare for the unexpected by minimizing risks and extra costs before they happen.

Four key Concepts for effective Risk Management

Integrating risk into decision making

One of the most important tests of true risk management effectiveness is the level of risk management integration into decision making. ISAR research shows that companies capable of systematically integrating risk management into planning and budgeting decisions, investment decisions, core operational business processes and key supporting functions, achieve long-term sustainable advantage.

Just consider an example of a large investment fund, which makes investment decisions only after an independent risks analysis and does simulations to test the effect of uncertainty on key project assumptions and forecasts. Another example is a large airline, which makes strategic decisions based on several quality alternatives with a risk assessment performed for each alternative.

Strong risk management culture

Human psychology and the ability of business managers to make decisions in situations of great uncertainty have a huge impact on risk management effectiveness. Nobel laureates, D.Kahneman and A.Tversky, have conducted some exceptional research in the field of risk perception, showing that most people, consciously or subconsciously, choose to be ignorant of risks. A robust risk management culture is therefore fundamental to effective risk management.

Take for example a large petrochemical company, which used online and face-to-face training to raise risk management awareness and competencies across all staff levels. The company also allocated resources to integrating risk management principles into the overall company culture. Another example is a government agency, which documented transparent discussion and sharing information about risks as one of their corporate values, which were later communicated to all employees.

Disclosing risk information

Another criterion for effective risk management is the willingness and ability of an organization to document and disclose risk-related information both internally and externally. A mature company not only documents the results of risk analysis in the internal decision making processes, but also discloses information about risks and their mitigation to relevant stakeholders, where appropriate, in external reporting or on the company website.

It is important to note that since actual risk information may be sensitive and contain commercial secrets, the focus of disclosure should not be the risks themselves but rather on the risk management framework, the executive commitment to managing risks, and the culture of the organization.

Remember that disclosure of risk management information allows companies to both make and save money. For example, the insurance market positively reacts to a company’s ability to disclose information about the effectiveness of its risk management and control environment, offering a reduction in insurance premiums. Banks and investors also see risk disclosure in a positive light, allowing companies to lower their financing costs.

Continuously improving risk management

The final criterion for effective risk management has to do with the continuous improvement of the risk management framework and the risk team itself. One investment fund was able to do this with the help of regular assessment of the quality and timeliness of their risk analysis, annual risk management culture assessments as well as periodic review of risk management team competencies.

For example, professional risk management certification helps to boost risk team competencies. One of the reasons behind the need for constant risk management improvement is the rapid development of the risk management discipline. The ISO 31000:2009 standard is currently being reviewed by more than 200 specialists from 30 different countries.

Some of the suggestions for the new version of the standard include the greater need for integration of risk management into business activities, including decision making and the need to explicitly take into account human and cultural factors. These changes could have a significant impact on many modern non-financial organizations, raising questions about their risk management effectiveness.

Risk management, just like any other element of corporate governance, must be integrated into the overall management system of the organization. ISO 31000:2009 explicitly talks about the need for risk management to be adaptive, dynamic, iterative and able to react to change. As organizational risk maturity increases, so will the tools used by the organization to manage risks in decision making. Professional risk managers should not only develop risk management processes for their organizations, but also improve their own risk management competencies.

Importance of Risk Management

By implementing a risk management plan and considering the various potential risks or events before they occur, an organization can save money and protect their future. This is because a robust risk management plan will help a company establish procedures to avoid potential threats, minimize their impact should they occur and cope with the results.

This ability to understand and control risk enables organizations to be more confident in their business decisions. Furthermore, strong corporate governance principles that focus specifically on risk management can help a company reach their goals.

Other important benefits of risk management include:

• Creates a safe and secure work environment for all staff and customers.
• Increases the stability of business operations while also decreasing legal liability.
• Provides protection from events that are detrimental to both the company and the environment.
• Protects all involved people and assets from potential harm.
• Helps establish the organization’s insurance needs in order to save on unnecessary premiums.

The importance of combining risk management with patient safety has also been revealed. In most hospitals and organizations, the risk management and patient safety departments are separated; they incorporate different leadership, goals and scope. However, some hospitals are recognizing that the ability to provide safe, high-quality patient care is necessary to the protection of financial assets and, as a result, should be incorporated with risk management.

The Concept of Business Ethics

Business Ethics proves that businesses can be, and have been, ethical and still make profits. Business Ethics was thought of as being a contradiction of terms. Thankfully, not anymore. Today, more and more interest is being given to the application of ethical practices in business dealings and the ethical implications of business.

Human beings have been endowed with the freedom of choice and the means of free will. He can distinguish between good and evil, right and wrong, just and proper. He can distinguish between the end he wishes to pursue and the means to gain that end.

Now, what is true for human beings is also true for business, because business are carried on by human beings only, and business organisations are nothing but formal structures for human beings to carry on their businesses. Moreover, businesses are thought of as being living, growing entities. Thus, businesses also have choices-a choice to maximise their profits and a choice to do good for the society in which they live and operate.

However, at most times, profit maximisation and discharging of social responsibilities at the maximum limit, cannot be carried on simultaneously. One is bound to affect the other. For example, Concern for Task (Productivity) and Concern for Human Beings (workers) are bound to pull each other in opposite directions. It is difficult, if not impossible, to maximise both together.

A conflict arises in trying to achieve both simultaneously. Hence, many managerial choices represent Managerial Dilemmas, between the profit consideration (commercial concern) and the social consideration (welfare concern) of the organisation. Many managerial decisions have ethical implications and these decisions give rise to Managerial Dilemmas.

For example, ruining occupations of age-old inhabitants in a particular locality and their ethical way of life, by using advanced technology, is an ethical dilemma. Technological advancements have to come, have to be used; however, what to do with the people whose life and earnings are affected by the utilisation of advanced technology, is a question which is difficult to answer.

A business or company is considered to be ethical only if it tries to reach a trade-off between perusing its economic objectives and its social obligations, i.e., between its obligations to the society where it exists and operates; its obligations to its people due to whom it can even think of pursuing economic goals; to its environment, from whom it takes so much without it demanding anything back in return; and the like.

Principal Components of Ethics

• i. Ethics are principles, values and beliefs that define what is right and wrong behaviour.
• ii. Ethics are broader than what is stated by law, customs and public opinion. For example, accepting gifts from father-in-law might be socially acceptable but not ethical; owners pocketing profits without sharing the gains with workers might be legally permissible but not ethical.
• iii. Ethical behaviour may differ from society to society. For example, birth control is mandatory in Communist societies but not in Catholic Christian societies.
• iv. Ethical standards are ideals of human conduct. Defining ethical stand¬ards is not an easy task.
• Business ethics refers to the application of moral principles to solve business problems. Here, the word ‘morals’ refers to accepted customs of conduct in a society. The purpose of business ethics is to guide the efforts of managers in discharging their duties to the satisfaction of various stakeholders e.g., employ¬ees, owners, customers, suppliers, and the general public.

13 Main Components of Business Ethics

There are several characteristics or features of business ethics, Some of them are discussed here:

1. Business ethics are based on social values, as the generally accepted norms of good or bad and ‘right’ and ‘wrong’ practices.
2. It is based on social customs, traditions, standards, and attributes.
3. Business ethics may determine the ways and means for better and optimum business performance.
4. Business ethics provide basic guidelines and parameters towards most appropriate perfections in a business scenarios.
5. Business ethics is concerned basically with the study of human behavior and conducts.
6. Business ethics is a philosophy to determine the standards and norms to make mutual interactions and behaviour between individuals and groups in the organisation.
7. Business ethics offers to establish the norms and directional approaches for making an appropriate code of conducts in business.
8. Business ethics are based on the concepts, thoughts, and standards as contributed as well as generated by Indian ethos.
9. Business ethics may be an ‘Art’ as well as ‘Science’ also.
10. Business ethics basically inspire the values, standards, and norms of professionalism in business for the well-being of customers.
11. Business ethics is to motivate and is consistently related to the concept of service motives for the customers’ viewpoint.
12. Business ethics shows better and perspective ways and means for most excellences in customisation.
13. Business ethics aims to emphasise more on social responsibility of business towards society.

10 Important Principles

In context of business performance, there are certain principles and guidelines, based on ethical conducts as given here:

1. Principle of Conscience – This principle is based on inner-feeling of persons to analyse the sense of right and wrong. On this basis the businessmen can determine different roles and behaviour at their levels.
2. Principle of Wishless Work – This principle emphasise that there is no need to perform all the task to be self-centered or self-interest. Accordingly, we should perform all the role and behaviour to another person’s for their esteemed interest. We should be devoted to our efforts to do the work for others.
3. Principle of Esprit – According to this principle businessmen should give due attention to make best possible services and try to develop the feelings of devotion and truthfulness in services. All the behaviour and activities should be based on values and service motive in business.
4. Principle of Publicity – According to this principle, all the activities and performance as conducting in business houses, should be well informed to every person or organisation who are directly or indirectly attached with business. It aims to remove the doubtfulness and misunderstanding among people.
5. Principle of Purity – It is most needful that every businessman should follow the politeness, truthfulness and tolerance for developing the feelings of mental peace. At the same time, the mental peace and purity also becomes the ways for politeness and tolerances etc.
6. Principle of Humanity – It is needful that every businessman should follow the human values, human decorum and human aspects within their policies, programmes and different working areas. The ethical behaviour may determine the path of humanity.
7. Principle of Universal Values – It is required that every businessmen should conduct and perform the task and different business activities to be based on universal assumptions, customs and overall accepted norms and principles by society.
8. Principle of Commitment – According to this principle, every businessmen should be able to fulfill their commitments and assurances as given to other persons. The implementation of commitments should be based on honesty and responsiveness.
9. Principle of Rationality – On the basis of the ethical code of conduct, every businessmen should analyse and evaluate the good or bad, right or wrong, ethical or unethical aspects within their business transaction and day to day working of the business houses. They must follow the rational attitudes and behaviour.
10. Principle of Communicability – According to this principle, there is a need to make effective means of communication with the internal and external persons as engaged with business houses. The communication should be in cleared, open and justified manners.

Business ethics plays a very crucial role in various management functions, which are given as follows:

i. Ethics in Finance:

It deals with various ethical dilemmas and violations in day-to-day financial transactions. An example of ethical violations is data fudging in which enterprises present a fabricated statement of accounts and other records, which are open to investigation. Ethics in financial transactions gained importance when due to their insufficiency nations suffered massive economic meltdowns.
The following are the ethics in finance:
a. Following truthfulness and authenticity in business transactions
b. Seeking the fulfillment of mutual interests
c. Getting the economies and financial units freed from greed-based methodologies.

ii. Ethics in Human Resource Management:

It deals with the enforcement of the rights of employees in an enterprise.
Such rights are as follows:
a. Having a right to work and be compensated for the same
b. Possessing a right for free association and participation
c. Enjoying a right for fair treatment in an enterprise
d. Holding a right to work in a hazard-free environment
e. Blowing whistle (an activity where an employee can raise voice against any wrong practice of anyone in an enterprise)

iii. Ethics in Marketing:

Deals with a number of issues, which are as follows:
a. Misinforming the customers about the products or services
b. Deciding high prices for the products and services
c. Creating false impression on the customers/consumers about the features of products
d. Promoting sexual attitudes through advertising; thus, affecting the young generation and children.

iv. Ethics in Production:

It deals with the responsibility of an organization to make sure that products and processes of production is not causing harm to the environment.

Benefits of Business Ethics

A business may be conducted according to certain self-recognised business ethics. If so, certainly, the following benefits are available to the concerned groups.

The benefits of business ethics are listed group wise:

1. Customers:
   i. Receive quality goods.
   ii. Pay reasonable price.
   iii. No difficulty in obtaining goods.
   iv. No price discrimination.
   v. No price fluctuation.
2. Employees:
   i. Fair wages.
   ii. Better working conditions and working environment.
   iii. Recognising human feelings.
   iv. Reward for efficiency.
   v. Job security.
   vi. Participation in management.
   vii. Proper personnel policy.
3. Industry:
   i. Healthy competition.
   ii. Better co-operation and co-ordination.
   iii. Steady growth.
4. Business:
   i. Adequate Profit.
   ii. Fast growth.
   iii. Fast diversification of business.
   iv. Less labour turnover.
5. Society:
   i. Better utilisation of resources.
   ii. Improving standard of living.
   iii. No pollution problem.
6. Government:
   i. Prompt collection of taxes.
   ii. Development of the nation.
   iii. Easy implementation of legislation.

Concept of Business Entity

The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. Doing so requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner. Without this concept, the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of a single business. Here are several examples of the business entity concept:

• A business issues a $1,000 distribution to its sole shareholder. This is a reduction in equity in the records of the business, and $1,000 of taxable income to the shareholder.
• The owner of a company personally acquires an office building, and rents space in it to his company at $5,000 per month. This rent expenditure is a valid expense to the company, and is taxable income to the owner.
• The owner of a business loans $100,000 to his company. This is recorded by the company as a liability, and by the owner as a loan receivable.

There are many types of business entities, such as sole proprietorships, partnerships, corporations, and government entities.

Importance of business entity concept

The business entity concept of accounting is of great importance because of the following reasons:

1. The business entity concept is essential to separately measure the performance of a particular business in terms of profitability and cash flows etc.
2. It helps in assessing the financial position of each and every business separately on a particular date.
3. It becomes difficult and impossible to audit the records of a business if they are intermingled with those of different entities/individuals.
4. The concept ensures that each and every business entity is taxed separately.
5. The employment of business entity concept is very general among business organizations. If a company ignores this concept, it would not be able to compare its financial performance with that of others in the industry.

Examples

Some examples of the application of business entity concept are given below:

Example 1:

Mr. John has acquired a floor of a building having 3 halls for $1,500 per month. He uses two halls for his business and one for personal purposes. According to business entity concept, only $1,000 (the rent of two halls) is a valid expense of the business.

Example 2:

The owner of a company lends loan to his company. It would be strictly recorded as company’s liability and that has to be paid back to the owner.

Concept of Business Communication

Business communication is the process of sharing information between people within and outside a company.

Effective business communication is how employees and management interact to reach organizational goals. Its purpose is to improve organizational practices and reduce errors.

The importance of business communication also lies in:

• Presenting options/new business ideas
• Making plans and proposals (business writing)
• Executing decisions
• Reaching agreements
• Sending and fulfilling orders
• Successful selling
• Effective meetings

All organized activity in a company relies on the process of business communication. This could be anything from managerial communication to technical communication with vendors.

And once communication becomes unclear, the company’s core systems risk falling apart. Data shows that 60% of internal communications professionals do not measure internal communications. Potential reasons include not knowing where to start, the next steps, or how to calculate ROI.

Types of Business Communication

Let’s first differentiate the main types of communication in a typical organization.

Internal Business Communication

Internal business communication can be:

• Upward communication: any communication that comes from a subordinate to a manager. Or from another person up the organizational hierarchy.
• Downward communication/Managerial communication: anything that comes from a superior to a subordinate.
• Lateral communication/Technical communication: internal or cross-departmental communication between coworkers

External Business Communication

External business communication is any messaging that leaves your office and internal staff. It involves dealing with customers, vendors, or anything that impacts your brand.

You can sort all communication in this spectrum into four types of business communication.

1. Getting and receiving instructions and assignments both upward and downward. This includes an effective delegation from one person to another. Most problems in business begin with unclear communications in this area.
2. Sharing and discussing information, including information sharing that goes on in meetings. When communication fails in this area, it causes tasks to be done improperly or not at all.
3. Giving feedback, correction, and discipline to people who report to you so that they can have the knowledge and the tools that they need to do their jobs better. Giving great, actionable feedback is a key skill for anyone in a leadership position. Non-verbal communication and body language also play a role here.
4. Problem-solving and decision-making meetings and discussions. These are considered among the most important discussions for any organization. This involves higher critical thinking and better communication technology.

Methods of Business Communication

When business communication actually happens, it’s either verbal or written.

Furthermore, communication takes place either in person/face-to-face or remotely.

Neither of these are better or worse for your company on their own and entirely depends on the context.

Written communication is great for keeping a paper trail of decisions and actions made as well as for putting together strategies and plans in place. Verbal interactions enable instantaneous idea generation and a more open flow of thoughts.

Some companies are in a single office. Some have offices in various time zones. Others are fully remote and don’t have a physical location (Buffer and Zapier are great examples of location-independent companies). These are the methods of business communication applicable to some or all of the above scenarios:

1) Web-based communication

This includes everyday communication channels like emails and instant messaging applications (such as Slack, Hangouts, or even Nextiva Chat).

The benefits of emails and messages lie in the ability to lead private conversations in a busy office environment, as well as sharing a message with many people—from a few to hundreds—all at once.

2) Telephone meetings

Phones removed the location barrier to running productive, fast-moving meetings. It allows for better idea exchange thanks to the non-verbal communication (tone of voice) compared to written communication. Cloud phone systems can accelerate onboarding and overall team collaboration.

3) Video conferencing

Great video conferencing systems enable people at remote locations to run meetings that feel as close to in-person meetings as possible. They take phone meetings one step up.

4) Face-to-face meetings

In-person meetings can help a business move forward with ideas quickly. Research shows that in-person meetings generate more ideas than virtual meetings.

However, having a rock-solid meeting agenda is essential for effective meetings. 46% of employees rarely or never leave a meeting knowing what they’re supposed to do next.

5) Reports and official documents

Documenting activities that impact other people and departments is a crucial part of a well-oiled business communication system.

The ability to refer to a written document at any moment reduces the chance for confusion or disagreement and provides extra clarity in communication.

6) Presentations

Presentations supported by reports and PowerPoint slide decks are often how meetings with larger groups are conducted.

These are great for sharing new ideas in a way that creates space for questions and any clarifications.

7) Forum boards and FAQs

An internal area for employees to refer to frequently asked questions on various departmental topics and to ask new ones that will make them more productive and up-to-date on a matter.

8) Surveys

Both internal and customer surveys are an ideal way to gather feedback and ratings on important topics. Surveys facilitate a healthy cycle of feedback-supported improvements and open a communication channel between all levels inside an organization.

9) Customer management activities

This can include any customer relations activity. Examples include live chat support, customer relationship management (CRM) systems, customer onboarding process, customer reviews, and more.

Objectives of Business Communication

The main objective of communication is to give information and to persuade different persons. Other objectives include conveying suggestion, opinion, idea, advice, request, etc.; imparting instructions, guidance and counseling; providing training; giving warning; appreciating good work; boosting of morale; etc. In the case of a business enterprise the main objective of communication is the improvement of its activities, all-round development of the organisation, and ultimate success in its operation.

1. Giving Information:

The primary object of communication is to make the members of an organisation aware of its goal and acquaint them with all the relevant information. This helps the business enterprise to achieve success through concerted efforts of all the people concerned. It is a fact that well-informed people can achieve better.

The managers should know in details the social, political, economic and other conditions of the place where the business is situated. Information regarding the employees, consumers and competitors should be at their fingertips. Employees, likewise, should be well-informed about their positions, powers and responsibilities in particular, and the aims and objectives of the organisation in general.

Information regarding demand for a particular product, the taste, liking, etc. of the consumers; availability of raw materials, credit facility, advertising media; latest government rules and regulations, etc. are required for the production and selling of the product.

Information can be obtained from past records, books, journals, newspapers, government publications, seminars, conferences, exhibitions, trade fares, etc. The other sources of information are the chambers of commerce, structured questionnaires, radio, television, internet, etc. Whatever might be the sources, the information must be reliable, accurate, complete and latest.

2. Persuasion:

To persuade means to make other people decide to do something, especially by repeatedly asking them or telling them the reasons why they should do it; in other words, influencing other people to believe or to do what one wants. This is one of the important objectives of communication.

The seller often influences the buyer through persuasion to buy his/her products rejecting earlier decision to buy other products. This persuasion should be so planned that the buyer becomes least conscious of being persuaded and even if he/she becomes conscious, he/she should be made to understand that it is for his/her own interest. Actually persuasion is an art which should be suggestive in nature rather than coercive.

3. Conveying Suggestion:

Communication helps in conveying suggestions, opinions and ideas. The workers who are actually engaged in the work know better the loopholes in it and can suggest to the managers the ways to plug the loopholes. This is an example of upward communication. In big offices, suggestion boxes are provided and suggestions are received throughout the year. Sometimes further communication is made with the suggestions for clarification. Interaction of suggestions and ideas help the progress of an organisation.

Suggestions are not in the nature of order or advice and are, therefore, never obligatory to follow them. Either acceptance or rejection is possible in the case of a suggestion. Some executives, supervisors or managers who have a false notion of self-dignity, self-respect, higher position, etc. may not accept a suggestion, even though it is good one because it comes from lower level. But dynamic executives welcome constructive suggestions in the interest of the organisation.

4. Advice:

One of the objectives of business communication is to advise an individual or a group of people. The manager advises the subordinates about the ways and means of better performance. Advice involves personal opinion and it influences the opinion and action of the other person(s) to whom advice is being given.

Today’s business world is very complex and no one can be an expert in all the spheres of business. So, a businessman has to take advice from experts regarding the matters in which he is not well-informed. For example, he may need advice regarding banking, insurance, stock exchange, tax rules, legal procedures, etc. Within the business the managers, supervisors and executives may advise each other (a case of horizontal communication) and the subordinates (downward communication).

5. Motivation:

Communication is made to inspire, to motivate, and to create a sense of loyalty among the employees. Through communication their morale is boosted up and it leads to better performance. Regular communication is necessary for motivating the employees and infusing in them a positive attitude towards work and a healthy relationship with the managers. This, ultimately, increases managerial efficiency.

Motivating someone means inspiring but not forcing him/her to do something. A motivated worker is an asset of any organisation. The greater the motivation, the lesser is the cost of supervision, because a motivated worker never neglects his duties.

Motivating factors include monetary incentives, security of job, job satisfaction, good working environment, participation in decision-making, fixation of target, etc. Money works as a good motivator. A worker works overtime when he/she is allowed extra wages. Security of job motivates an employee to devote himself/herself whole­heartedly to the job.

If an employee is satisfied with the job, he/she gets pleasure in doing it. Good working environment attracts him/her to work in co-operation with other members. Workers’ participation in decision-making gives them a sense of being part and parcel of the organisation. Fixation of production target, sales target, etc. of an organisation helps the workers to work together to achieve the target. Thus, different factors of motivation contribute to achieve performance excellence of an organisation.

6. Training:

To meet the need of an organisation, senior employees may need to be trained to update them about the new technological developments so as to adjust themselves to changing work environment or job demands. The new employees may also require training at the initial stage to cope up with the methods, techniques and systems of work in the organisation.

Communication is the key to all these kinds of training. Such communication can be made through classroom teaching, lectures, seminars, short courses, conferences, educational tours, film shows, etc. Not only the ordinary employees, but the managerial staffs also need to be trained in the process stated above.

7. Instruction, Guidance and Counselling:

One of the objectives of business communication is to manage the employees by means of imparting instruction, providing guidance and arranging for counseling. Legal, vocational and medical guidance and counseling are provided free of cost for the employees in a good business organisation. Doctors, lawyers, coaches, etc. are employed for the purpose. The underlying objective of such assistance is to keep the employees physically fit and mentally alert so that they can work whole-heartedly for the well-being of the organisation.

8. Giving Warning and Appreciating Good Work:

It is very much necessary to appreciate a good worker. It will encourage him/her to strive for better performance and greater involvement. It makes the employee conscious about his/her responsibilities. On the other hand, it is also necessary to give warning to the employees who tend to be in disciplined, non-accountable and unproductive or create disturbance. The objective of both appreciation and warnings may be accomplished through oral or written communication.

9. Resource Utilisation:

Communication checks wastage of the resources of the organisation and helps their better utilisation. Lack of knowledge or lack of proper direction in time may cause the waste or misuse. Communication helps to bridge the gap of knowledge through instruction, advice, etc. and waste or misuse of resource is minimised. Not only material resources, but also the financial resources, human resources and other resources are utilised properly through communication.

10. Management Efficiency:

One of the objectives of business communication is to increase efficiency of the management. If there is a good network of communication (formal and informal), the organisation can be managed efficiently and effectively.

Importance of Business Communication

The significance or importance of business communication is increasing very rapidly day-by-day. The business world of today cannot move smoothly without the help of communication. It makes a business enterprise dynamic and increases its efficiency. It is regarded as the motivating force that leads to industrial harmony.

It can be used as a device for controlling the business activities to ensure the achievement of organisational goals. According to Keith Davis, the role of communication in business is as essential as the blood veins or arteries in the human body. In its absence, a business organisation would cease to exist.

Business communication has a significant role to play in management whose objective is to direct the individual efforts for securing the overall coordination of organisational activities. It performs the energizing function in the organisation by transmitting information, facts and ideas and thereby making co-ordinated efforts possible. Communication can, as such, be regarded as basic to the functioning of an organisation.

Theo Haimann has rightly said that the success of management activities, to a great extent, depends on a good communication system. Communication creates a favourable work environment, motivates the workers to work hard, and, thus, management activities become easier. Through the communication process, it is possible to supply all necessary and important messages or information at all levels of the organisation.

Business communication promotes managerial efficiency and induces the human elements in an organisation to develop a spirit of co-operation which finally leads to peak performances. The process of leadership depends on effective communication. A Sound communication system is an essential requirement of good labor-management relations.

With the help of communication, there is a better understanding of the objectives and policies which encourage co-ordination. The growing importance of human relations in every business with customers and workers has made communication the life-line of business. Producers are required to make sales appeal to their customers.

The subordinates are required to communicate their grievances and complaints to their superior, otherwise, they may lead to conflicts. Proper communication helps in implementing the decisions effectively and leads to smooth running of the business. It creates mutual trust and confidence and builds up the morale of the employees and, thus, provides job satisfaction to them.

Business communication is all the more important in management because the success of an enterprise depends upon how effectively its employees understand one another. Most of the problems of business can be attributed to poor communication between the managers and workers.

So, lack of communication or poor communication will affect a business in different ways. It will greatly affect understanding of the employees, place them in utter confusion, create apathy to their work, hinder their willing co-operation, put co-ordination out of gear and invite dislocation, chaos and conflict in all business affairs and, ultimately, the very survival of the business will be at stake.

The importance of effective communication in management has been widely recognised in recent years. It has become one of the most vital factors in the efficient performance of management. It has an important bearing on management affairs from different points of view.

Above discussion of the significance of business communication may be stated point- wise as follows:

1. Movement of Information:

Communication helps to move information from one place to another and from one person to another. It develops a chain of understanding among the workers of different levels in a business enterprise.

2. Efficient and Smooth Running of Enterprise:

The smooth and efficient functioning of an enterprise entirely depends upon the effectiveness of the system of communication. It provides the basis of direction and actuates people to action in accordance with the desires of the management authority. According to G. R. Terry: “Communication serves as the lubricant fostering the smooth operation of the management process.”

3. Promotion of Management Efficiency:

Communication encircles all the functions of business management. So, without it, no function of business management can proceed towards its desired goal. It is the tool of managerial efficiency. The managerial efficiency depends upon getting things done through other people by making them know and understand what the manager wants them to do. It is the work of communication to keep the employees informed of everything necessary for smooth work performance.

4. Proper Planning:

Communication is very helpful in planning the activities of business. It provides the managers information and ideas necessary for sound planning. According to Theo Haimann “Only through good communication can company policies and practices be formulated and administered.” Secrecy of information creates suspicion among the workers and separates them. Understanding of the common problems unites them for showing a better record of their performance.

5. Basis of Decision-Making:

Communication helps the managers to take essential decisions and conduct vital operations. The quality of decisions made in an organisation entirely depends on the volume and quality of information available to the management authority. In the absence of effective communication it may not be possible for top management personnel to come in closer contact with their subordinates.

6. Basis of Co-Operation:

By promoting mutual understanding and meeting of minds, communication paves the way for co-operation. Communication creates condition for mental acceptance of the work before its actual performance. This mental acceptance is the will- to-do before actually doing it. Communication involves understanding and willing acceptance of orders and instructions and acts as the basis for individual and co-operative efforts.

7. Means of Co-Ordination:

Co-ordination implies orderly group efforts to provide unity of action. This unity of action is the result of team work which, in turn, depends, to a great extent, upon clear understanding of the organisational goals, the mode of their achievement and situation of the work. The function of the business communication is to get the workers fully informed of everything relating to the work and bring a perfectly tuned harmony in their work.

8. Job Satisfaction:

Proper communication system extends mutual trust and faith. It thus creates confidence in the ability of their manager, promotes their loyalty to the enterprise and stimulates their job interest. Proper communication system enables the subordinates to bring to the notice of the managers their viewpoints, grievances and troubles. This facility raises the morale of the workers and, ultimately, leads to job satisfaction for high performance.

9. Establishment of Public Relations:

A business enterprise comes into contact with several social groups, e.g., customers, investors, trade unions, government and the local commu­nity. It must maintain cordial relations with each of these groups to develop a favourable image. It must continuously strive to convince the public in general that its actions are taken in the interest of the society. No public relation can be established without communication.

10. Establishment of Effective Leadership:

Effective leadership is established through communication. The ideas, orders, instructions, direction, etc., of the leader or manager is transmitted to the subordinate employees through communication. The manager can influence them and create a healthy relation by wiping out misunderstanding and distrust between management authority and subordinates through communication.

11. Assisting Motivation:

Communication creates motivation. Through it the managers and employees are well-acquainted with the latest information relating to the organisation. This leads to avoidance of hostility, acceptance of reality, change of attitude, consciousness of responsibility and—ultimately—motivation to work.

12. Loyalty:

The confidence and loyalty of the lower employees on the management personnel increases as they become aware of the competence of efficiency of their boss through communication. It helps to strengthen mutual trust.

13. Accomplishment of Goals:

Communication fulfills the organisational objectives through co-operation and co-ordination among the managerial and working staff. Inter­connections between the managers and subordinate employees are established through effective communication system.

14. Industrial Peace:

Workers’ unrest is a problem today. It is communication which can establish peace in the industry. Two-way communication helps to develop mutual co­operation and understanding. Through downward communication the management personnel send their orders, instructions, directions, etc. to the subordinates.

On the other hand, the upward communication helps the subordinates to convey to their superiors their demands, grievances, complaints, suggestions, etc. Thus, through communication of facts and information between the superiors and subordinates, industrial peace can be established.

Concept of Business Analytics

Business Analytics is “the study of data through statistical and operations analysis, the formation of predictive models, application of optimization techniques, and the communication of these results to customers, business partners, and college executives.” Business Analytics requires quantitative methods and evidence-based data for business modeling and decision making; as such, Business Analytics requires the use of Big Data.

Components of Business Analytics

Mobile dashboards have similar components to business dashboards, but with a few key differences. The components of business dashboards include:

• Data Aggregation: Before data can be analyzed, it must be collected, centralized, and cleaned to avoid duplication, and filtered to remove inaccurate, incomplete, and unusable data. Data can be aggregated from:
  • Transactional records: Records that are part of a large dataset shared by an organization or by an authorized third party (banking records, sales records, and shipping records).
  • Volunteered data: Data supplied via a paper or digital form that is shared by the consumer directly or by an authorized third party (usually personal information).
• Data Mining: In the search to reveal and identify previously unrecognized trends and patterns, models can be created by mining through vast amounts of data. Data mining employs several statistical techniques to achieve clarification, including:
  • Classification: Used when variables such as demographics are known and can be used to sort and group data
  • Regression: A function used to predict continuous numeric values, based on extrapolating historical patterns
  • Clustering: Used when factors used to classify data are unavailable, meaning patterns must be identified to determine what variables exist
• Association and Sequence Identification: In many cases, consumers perform similar actions at the same time or perform predictable actions sequentially. This data can reveal patterns such as:
  • Association: For example, two different items frequently being purchased in the same transaction, such as multiple books in a series or a toothbrush and toothpaste.
  • Sequencing: For example, a consumer requesting a credit report followed by asking for a loan or booking an airline ticket, followed by booking a hotel room or reserving a car.
• Text Mining: Companies can also collect textual information from social media sites, blog comments, and call center scripts to extract meaningful relationship indicators. This data can be used to:
  • Develop in-demand new products
  • Improve customer service and experience
  • Review competitor performance
• Forecasting: A forecast of future events or behaviors based on historical data can be created by analyzing processes that occur during a specific period or season. For example:
  • Energy demands for a city with a static population in any given month or quarter
  • Retail sales for holiday merchandise, including biggest sales days for both physical and digital stores
  • Spikes in internet searches related to a specific recurring event, such as the Super Bowl or the Olympics
• Predictive Analytics: Companies can create, deploy, and manage predictive scoring models, proactively addressing events such as:
  • Customer churn with specificity narrowed down to customer age bracket, income level, lifetime of existing account, and availability of promotions
  • Equipment failure, especially in anticipated times of heavy use or if subject to extraordinary temperature/humidity-related stressors
  • Market trends including those taking place entirely online, as well as patterns which may be seasonal or event-related
• Optimization: Companies can identify best-case scenarios and next best actions by developing and engaging simulation techniques, including:
  • Peak sales pricing and using demand spikes to scale production and maintain a steady revenue flow
  • Inventory stocking and shipping options that optimize delivery schedules and customer satisfaction without sacrificing warehouse space
  • Prime opportunity windows for sales, promotions, new products, and spin-offs to maximize profits and pave the way for future opportunities
• Data Visualization:Information and insights drawn from data can be presented with highly interactive graphics to show:
  • Exploratory data analysis
  • Modeling output
  • Statistical predictionsThese data visualization components allow organizations to leverage their data to inform and drive new goals for the business, increase revenues, and improve consumer relations.

Types of Business Analytics

There are four types of business analytics, each increasingly complex and closer to achieving real-time and future situation insight application. These analytics types are usually implemented in stages, starting with the simplest, though one type is not more important than another as all are interrelated.

The following BA examples provide insight into the roles of each type in the analytics process. By leveraging these four types of analytics, big data can be dissected, absorbed, and used to create solutions for many of the biggest challenges facing businesses today.

• Descriptive Analytics: Descriptive analytics describes or summarizes a business’s existing data to get a picture of what has happened in the past or is happening currently. It is the simplest form of analytics and employs data aggregation and mining techniques. This type of business analytics applies descriptive statistics to existing data to make it more accessible to members of an organization, from investors and shareholders to marketing executives and sales managers. Descriptive analytics can help identify strengths and weaknesses and provide insight into customer behavior. Strategies can then be developed and deployed in the areas of targeted marketing and service improvement, albeit at a more basic level than if more complex diagnostic procedures were used. The most common physical product of the descriptive analysis is a report heavy with visual statistical aids.
• Diagnostic Analytics: Diagnostic analytics shifts from the “what” of past and current events to “how” and “why,” focusing on past performance to determine which factors influence trends. This type of business analytics employs techniques such as drill-down, data discovery, data mining, and correlations to uncover the root causes of events. Diagnostic analytics uses probabilities, likelihoods, and the distribution of outcomes to understand why events may occur and employ techniques including attribute importance, sensitivity analysis, and training algorithms for classification and regression. However, diagnostic analysis has limited ability to provide actionable insights, delivering correlation results as opposed to confirmed causation. The most common physical product of the diagnostic analysis is a business dashboard.
• Predictive Analytics: Predictive analytics forecasts the possibility of future events using statistical models and machine learning techniques. This type of business analytics builds on descriptive analytics results to devise models that can extrapolate the likelihood of select outcomes. Machine learning experts and trained data scientists are typically employed to run the predictive analysis using learning algorithms and statistical models, enabling a higher level of predictive accuracy than is achievable by business intelligence alone.A common application of predictive analytics is sentiment analysis. Existing text data can be collected from social media to provide a comprehensive picture of opinions held by a user. This data can be analyzed to predict their sentiment towards a new subject (positive, negative, neutral). The most common physical product of the predictive analysis is a detailed report used to support complex forecasts in sales and marketing.
• Prescriptive Analytics: Prescriptive analytics goes a step beyond predictive analytics, providing recommendations for next best actions, and allowing potential manipulation of events to drive better outcomes. This type of business analytics is capable of not only suggesting all favorable outcomes according to a specified course of action but recommending specific actions to deliver the most desired result. Prescriptive analytics relies on a strong feedback system and constant iterative analysis and testing to continually learn more about the relationships between different actions and outcomes. One of the most common uses of prescriptive analytics is the creation of recommendation engines, which strive to match options to a consumer’s real-time needs. The key to effective prescriptive analysis is the emergence of deep learning and complex neural networks, which can micro-segment data across multiple parameters and timelines simultaneously. The most common physical product of the prescriptive analysis is a focused recommendation for the next best actions, which can be applied to clearly identify business goals. These four different types of analytics may be implemented sequentially, but there is no mandate. In many scenarios, organizations may jump directly from descriptive to prescriptive analytics thanks to artificial intelligence, which streamlines the process.

Business Analytics Tools

BA tools include many methodologies and open source solutions that can be leveraged to help analysts perform tasks and generate reports that are easy for laypersons to understand.

Requirement management (RM) tools help ensure that organizations can identify, document, verify, and meet the needs and expectations of their target demographics and existing customers. Requirements may be generated from customers, partners, or stakeholders. Many companies simply use Microsoft Excel at a business-wide level for RM. Others prefer the open source application aNimble, which requires significant coding ability to deploy at top levels.

Reporting tools can be obtained from open source platforms to allow business analysts to manage their processes and present their findings in a relevant, comprehendable way. Some of the most flexible and user-friendly open source options include:

• Birt: BIRT is a basic open source analytics tool for reports, dashboards, and visualizations, but requires working knowledge of Java, scripts, and formatting. Generated reports are embeddable.
• Zeppelin by Apache: This option is billed as a “multi-purpose notebook” for data visualization, analytics, and data discovery, and readily ingests data from related Apache-based technologies including Spark, Hadoop Hive, PostgreSQL, and Python.
• OmniSci: Formerly MapD, OmniSci is a high-performance analytics tool ideal for business analysts and data scientists, with big data capable of querying, interactive dashboards, and an SQL engine designed to manage extremely large workloads.
• SpagoBI: SpagoBI is a popular tool with features that include basic reporting, dashboards, and data management tools. The “cockpit” allows users to create 3-D charts for reporting at a high level.
• Matomo: Matomo is an open source alternative to Google Analytics, with a high level of customization and expansive features, including core metrics on visitor numbers, referrals, bounce rates, and exit pages. Reporting and dashboards make using Matomo intuitive.
• Metabase: Metabase is an open source BI tool that lets users ask questions about input data and displays answers in detailed tables or bar graphs for easy reporting.

Challenges with Business Analytics

Penn State University’s John Jordan described the challenges with Business Analytics: there is “a greater potential for privacy invasion, greater financial exposure in fast-moving markets, greater potential for mistaking noise for true insight, and a greater risk of spending lots of money and time chasing poorly defined problems or opportunities.” Other challenges with developing and implementing Business Analytics include…

• Executive Ownership – Business Analytics requires buy-in from senior leadership and a clear corporate strategy for integrating predictive models
• IT Involvement – Technology infrastructure and tools must be able to handle the data and Business Analytics processes
• Available Production Data vs. Cleansed Modeling Data – Watch for technology infrastructure that restrict available data for historical modeling, and know the difference between historical data for model development and real-time data in production
• Project Management Office (PMO) – The correct project management structure must be in place in order to implement predictive models and adopt an agile approach
• End user Involvement and Buy-In – End users should be involved in adopting Business Analytics and have a stake in the predictive model
• Change Management – Organizations should be prepared for the changes that Business Analytics bring to current business and technology operations
• Explainability vs. the “Perfect Lift” – Balance building precise statistical models with being able to explain the model and how it will produce results

Trends in Business Analytics

• Big Data: With an increasing emphasis on digitization in every aspect of life, datasets continue to expand at an unprecedented rate. This expansion is both an advantage and a disadvantage—more data means more potential insights, but the sheer volume can be overwhelming.
• Artificial Intelligence: As AIs become smarter and able to teach themselves, AIs created by AIs are being developed and launched in industry verticals such as banking, financial services, insurance, retail, hospitality, engineering, manufacturing, and more.
• Deep Learning: The next step up from machine learning, deep learning leverages the advantages of vast computing power to manage enormous data sets, identifying patterns and delivering predictive results that were formerly impossible.
• Neural Networks: Data scientists can now create “brains” which have the computing power of thousands of human minds. Data can be processed and sorted, patterns can be identified along a historical timeline, and future predictions are delivered with an unprecedented level of accuracy.
• The Internet of Things: IoT-driven devices number in the millions, delivering real-time data to organizations worldwide and allowing intimate entry into the lives of consumers around the globe.
• Micro-Segmentation: As data becomes bigger, the ability to separate it into smaller and smaller slices enables organizations to accurately define their “ideal” customer and create funnels that lead them directly to the desired action. This granular segmentation is the driving force behind successful digital transformation initiatives.

Concept of Business Accounting

Business accounting is the systematic recording, analyzing, interpreting and presenting of financial information. Accounting may be done by one person in a small business, or by different teams in large organizations.

Accounting is the way a business keeps track of its operations. Accountants analyze the business finances so the owner can make better decisions. This information is organized into reports that show the financial health of a business.

Accounting helps business owners meet their compliance obligations. It also helps them make smart decisions with their money.

Accounting not only records financial transactions and conveys the financial position of a business enterprise; it also analyses and reports the information in documents called “financial statements.”

Recording every financial transaction is important to a business organisation and its creditors and investors. Accounting uses a formalised and regulated system that follows standardised principles and procedures.

The job of accounting is done by professionals who have educational degrees acquired after years of study. While a small business may have an accountant or a bookkeeper to record money transactions, a large corporation has an accounts department, which supplies information to:

• Managers who guide the company.
• Investors who want to know how the business is doing.
• Analysts and brokerage firms dealing with the company’s stock.
• The government, which decides how much tax should be collected from the company.

Accounting Principles

Obviously, if each business organisation conveys its information in its own way, we will have a babel of unusable financial data.

Personal systems of accounting may have worked in the days when most companies were owned by sole proprietors or partners, but they do not anymore, in this era of joint stock companies.

These companies have thousands of stakeholders who have invested millions, and they need a uniform, standardised system of accounting by which companies can be compared on the basis of their performance and value.

Therefore, accounting principles based on certain concepts, conventions, and tradition have been evolved by accounting authorities and regulators and are followed internationally.

These principles, which serve as the rules for accounting for financial transactions and preparing financial statements, are known as the “Generally Accepted Accounting Principles,” or GAAP.

The application of the principles by accountants ensures that financial statements are both informative and reliable.

It ensures that common practices and conventions are followed, and that the common rules and procedures are complied with. This observance of accounting principles has helped developed a widely understood grammar and vocabulary for recording financial statements.

However, it should be said that just as there may be variations in the usage of a language by two people living in two continents, there may be minor differences in the application of accounting rules and procedures depending on the accountant.

For example, two accountants may choose two equally correct methods for recording a particular transaction based on their own professional judgement and knowledge.

Accounting principles are accepted as such if they are (1) objective; (2) usable in practical situations; (3) reliable; (4) feasible (they can be applied without incurring high costs); and (5) comprehensible to those with a basic knowledge of finance.

Accounting principles involve both accounting concepts and accounting conventions. Here are brief explanations.
 

Accounting Concepts

1. Business entity concept: A business and its owner should be treated separately as far as their financial transactions are concerned.
2. Money measurement concept: Only business transactions that can be expressed in terms of money are recorded in accounting, though records of other types of transactions may be kept separately.
3. Dual aspect concept: For every credit, a corresponding debit is made. The recording of a transaction is complete only with this dual aspect.
4. Going concern concept: In accounting, a business is expected to continue for a fairly long time and carry out its commitments and obligations. This assumes that the business will not be forced to stop functioning and liquidate its assets at “fire-sale” prices.
5. Cost concept: The fixed assets of a business are recorded on the basis of their original cost in the first year of accounting. Subsequently, these assets are recorded minus depreciation. No rise or fall in market price is taken into account. The concept applies only to fixed assets.
6. Accounting year concept: Each business chooses a specific time period to complete a cycle of the accounting process—for example, monthly, quarterly, or annually—as per a fiscal or a calendar year.
7. Matching concept: This principle dictates that for every entry of revenue recorded in a given accounting period, an equal expense entry has to be recorded for correctly calculating profit or loss in a given period.
8. Realisation concept: According to this concept, profit is recognised only when it is earned. An advance or fee paid is not considered a profit until the goods or services have been delivered to the buyer.

Basic Accounting Terms

Here is a quick look at some important accounting terms.

Accounting equation: The accounting equation, the basis for the double-entry system (see below), is written as follows: Assets = Liabilities + Stakeholders’ equity

This means that all the assets owned by a company have been financed from loans from creditors and from equity from investors. “Assets” here stands for cash, account receivables, inventory, etc., that a company possesses.

Accounting methods: Companies choose between two methods—cash accounting or accrual accounting. Under cash basis accounting, preferred by small businesses, all revenues and expenditures at the time when payments are actually received or sent are recorded. Under accrual basis accounting, income is recorded when earned and expenses are recorded when incurred.

Account receivable: The sum of money owed by your customers after goods or services have been delivered and/or used.

Account payable: The amount of money you owe creditors, suppliers, etc., in return for goods and/or services they have delivered.

Assets (fixed and current): Current assets are assets that will be used within one year.

For example, cash, inventory, and accounts receivable (see above). Fixed assets (non-current) may provide benefits to a company for more than one year—for example, land and machinery.

Balance sheet: A financial report that provides a gist of a company’s assets and liabilities and owner’s equity at a given time.

Capital: A financial asset and its value, such as cash and goods. Working capital is current assets minus current liabilities.

Cash flow statement: The cash flow statement of a business shows the balance between the amount of cash earned and the cash expenditure incurred.

Credit and debit: A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is entered on the right in an accounting entry. A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is entered on the left in an accounting entry.

Double-entry bookkeeping: Under double-entry bookkeeping, every transaction is recorded in at least two accounts—as a credit in one account and as a debit in another.

For example, an automobile repair shop that collects Rs. 10,000 in cash from a customer enters this amount in the revenue credit side and also in the cash debit side. If the customer had been given credit, “account receivable” (see above) would have been used instead of “cash.” (Also see “single-entry bookkeeping,” below.)

Financial statement: A financial statement is a document that reveals the financial transactions of a business or a person. The three most important financial statements for businesses are the balance sheet, cash flow statement, and profit and loss statement (all three listed here alphabetically).

General ledger: A complete record of financial transactions over the life of a company.

Journal entry: An entry in the journal that records financial transactions in the chronological order.

Profit and loss statement (income statement): A financial statement that summarises a company’s performance by reviewing revenues, costs and expenses during a specific period.

Single-entry bookkeeping: Under the single-entry bookkeeping, mainly used by small or businesses, incomes and expenses are recorded through daily and monthly summaries of cash receipts and disbursements. (Also see “double-entry bookkeeping,” above.)

Types of accounting: Financial accounting reports information about a company’s performance to investors and credits. Management accounting provides financial data to managers for business development.

There are a number of conceptual issues that one must understand in order to develop a firm foundation of how accounting works. These basic accounting concepts are as follows:

• Accruals concept. Revenue is recognized when earned, and expenses are recognized when assets are consumed. This concept means that a business may recognize revenue, profits and losses in amounts that vary from what would be recognized based on the cash received from customers or when cash is paid to suppliers and employees. Auditors will only certify the financial statements of a business that have been prepared under the accruals concept.
• Conservatism concept. Revenue is only recognized when there is a reasonable certainty that it will be realized, whereas expenses are recognized sooner, when there is a reasonable possibility that they will be incurred. This concept tends to result in more conservative financial statements.
• Consistency concept. Once a business chooses to use a specific accounting method, it should continue using it on a go-forward basis. By doing so, financial statements prepared in multiple periods can be reliably compared.
• Economic entity concept. The transactions of a business are to be kept separate from those of its owners. By doing so, there is no intermingling of personal and business transactions in a company’s financial statements.
• Going concern concept. Financial statements are prepared on the assumption that the business will remain in operation in future periods. Under this assumption, revenue and expense recognition may be deferred to a future period, when the company is still operating. Otherwise, all-expense recognition, in particular, would be accelerated into the current period.
• Matching concept. The expenses related to revenue should be recognized in the same period in which the revenue was recognized. By doing this, there is no deferral of expense recognition into later reporting periods, so that someone viewing a company’s financial statements can be assured that all aspects of a transaction have been recorded at the same time.
• Materiality concept. Transactions should be recorded when not doing so might alter the decisions made by a reader of a company’s financial statements. This tends to result in relatively small-size transactions being recorded so that the financial statements comprehensively represent the financial results, financial position, and cash flows of a business.

Concept of Business Education

Business education is a branch of education that involves teaching the skills and operations of the business industry. This field of education occurs at multiple levels, including secondary and higher education institutes. Education in business has many forms, mainly occurring within a classroom of a school.

Internships are also another way to receive this type of education. Business education has many components, as there are many different areas of the business industry as a whole. An education in business varies greatly in its curriculum and popularity around the world. Career development is often an integral part of an education in business.

Aim of Business Education

We can identify the goal of business education as the production of manpower who the requisite knowledge, skill and attitude for harnessing other resources and bringing them into a co-operative relationship, yielding the goods and services demanded by society for the satisfaction of their wants and needs (Anao).

Nwakolo added that Business Education is aimed at turning out the right caliber of workforce with business and the entrepreneurial ability for positions in various sectors of the economy. The above statements are non-pedagogic. A third must be provided to water for business teacher education.

Therefore, the aim of business education can additionally be stated as the provision of teachers with adequate skills, and pedagogy needed for imparting business skills, knowledge and attitudes to business education students in the secondary schools or in the tertiary institutions.

• To educate individuals for and about business
• To provide a continuous program of planned learning experience designed to equip individuals to fulfill effectively their roles as workers, consumers, and citizens.
• To provide educational information that helps students relate their interests, needs and abilities to occupational opportunities in business.
• To provide educational opportunities for students preparing for career in fields other than business in order to acquire business knowledge and skills needed to function effectively in those careers.

Concept of Responsibility

Responsibility is the task entrusted by managers to subordinates. It means a moral commitment to do the work assigned. A person who performs some work has the responsibility to do it. It is the obligation to carry out the assigned task. It is the duty or task that a person is assigned to accomplish. “Responsibility is the obligation of an individual to carry out assigned activities to the best of his or her ability”.

Responsibility refers to an obligation to perform certain functions in order to achieve certain results. Following are the main characteristics or features of responsibility:

1. An organization can assign responsibility to human beings only and not to any non-living objects such as a machine, equipment, etc.
2. It arises from a superior-subordinate relationship. A senior possesses the authority to get the required task done from his subordinates. Thus, for this purpose, he assigns duties to subordinates. The subordinates are under a duty to perform the work assigned to them.
3. The management can confine it to the performance of a single function or can be a continuing obligation.
4. We can also define it in terms of functions, targets or goals. When responsibility is expressed in terms of targets, it enables the subordinates to know by what standards their performance shall be evaluated.
5. The core of responsibility is the obligation of a subordinate to perform the duty or task which the superior assigns to him.
6. Responsibility is coextensive with authority. When a superior delegates authority to his subordinate, the latter becomes responsible to the former for the performance of the task and also for proper use of authority. Thus, responsibility is a derivative of authority.
7. Responsibility is absolute and one cannot delegate it. A subordinate to whom his superior assigns a task, may himself perform it or may get it done from his own subordinate. But, in both cases, he shall only remain responsible to his superior.
8. It always flows upward. A subordinate will only be always responsible to his superior.
9. Accountability arises out of responsibility. The person who accepts responsibility is also accountable for his performance. However, the management can use various techniques to define responsibilities in order to involve members of an organization in its coordination effort.

What are the techniques that the management uses to define the responsibilities in an organization?

The two such techniques are:

1. Responsibility Charting: A responsibility chart is a manner of summarizing the relationship between tasks and task performers. It lists the complicated activities or the decisions that need to be made and the individuals who are responsible for each of them. The organization needs to show the tasks on the vertical axis and the task performers on the horizontal axis.

However, the following four roles are very important:

1. An individual is responsible for the activity or the decision.
2. He shall approve the activity or decision.
3. The management shall consult him before completing the activity or making the decision.
4. The management needs to inform an individual about the activity or the decision.

  2. Role Negotiation: It is an important technique and can supplement the use of responsibility charting. The basis of the technique is that nobody gets anything without promising something in exchange. Members of the organization list the re-allotment of tasks at periodic intervals in order to maximize coordination.

The main aim of this approach is the identification of the independent clusters of tasks completed by the organization. It also aims at matching the personal needs and works preference of individuals with the tasks that need to be completed.

Design Concept

A project is a temporary effort to create a unique product, service or result. A project has a definite start and end. A project management plan is created by a project manager. This plan requires a buy-in from all stakeholders. The plan should be realistic, time-bound and achievable.

Projects drive change and result in benefits.

Simply put, a project is a series of tasks that need to be completed in order to reach a specific outcome. A project can also be defined as a set of inputs and outputs required to achieve a particular goal. Projects can range from simple to complex and can be managed by one person or a hundred. Projects are often described and delegated by a manager or executive.

They go over their expectations and goals and it’s up to the team to manage logistics and execute the project in a timely manner. Sometimes deadlines can be given or a time limitation. For good project productivity, some teams break the project up into individual tasks so they can manage accountability and utilize team strengths.

What is Project Management?

Project Management is not about managing people alone. PMI bifurcates project management into different process groups and knowledge areas. Process groups include initiating, planning, executing, monitoring and controlling, and closing.

Knowledge areas include integration, scope, time cost, quality, human resources, communication, risk, procurement, and stakeholder management.

The roots of project management can be traced as far back as the building of the Pyramids in Giza and the Great Wall of China. However, the modern development of project management began in the 19th century when railway companies purchased tons of raw material and employed thousands of people to work on the transcontinental railroad.

By the early 20th century, Frederick Taylor applied concepts of project management to the work day, developing strategies for working smarter and improving inefficiencies, rather than demanding laborers work harder and longer. Henry Gantt, an associate of Taylor’s, took those concepts and used bars and charts to graph when certain tasks, or a series of tasks were completed, creating a new way to visualize project management.

During World War II, military and industrial leaders were employing even more detailed management strategies, eventually leading to more standardized processes like the critical path method.

These practices grew in popularity across industries, and in 1965 and 1969, the International Project Management Association and Project Management Institute were founded, respectively. In 2001, Agile project management methodologies were codified by the creation of the Agile Manifesto.

The field of project management continues to shift as an increasingly competitive landscape, the need to deliver change fast, and new technologies (automation, AI, etc…) enter the marketplace.

Why is project management important?

Project managers will help your organization:

• have a more predictable project planning and execution process
• adhere to project budgets, schedules, and scope guidelines
• resolve project roadblocks and escalate issues quicker and easier
• identify and terminate projects that do not have relevant business value
• become more efficient
• improve collaboration across and within teams
• identify and plan for risks

What do project managers do?

In short, project managers are responsible for the planning, executing, monitoring, controlling, and completion of projects. However, that is just the tip of the project management iceberg. Here are a few of the main project manager responsibilities:

• Build the plan: Project managers are in charge of plotting out the most realistic course for the project. The plan must include the project scope, timeline, and budget. This can also include identifying the right tools for the job.
• Assemble the team: Identifying the proper team is critical to project success. Every project team will vary depending on the scope of the initiative and the functions needed to complete the project. Finding specialists and subject matter experts for each of the necessary tasks is ideal.
  
• Assign tasks: Project managers must provide their team with a clear definition of specific tasks and timeline for every part of the project. Although each team member will be responsible for their own assignments, many tasks will require collaboration from both internal and external team members.
  
• Leading the team: Now that the team has been assembled and their tasks have been assigned, the project manager must keep the machine well-oiled. This will include checking in on individuals for status updates, identifying and clearing roadblocks, negotiating disagreements, keeping team morale high, and providing training and mentoring.
  
• Managing budget: Most projects will require some expenses, which means understanding how to put together a project budget and managing cost is critical for success. This will involve comparing real-life expenditures to estimates, and adjusting the project plan if necessary.
  
• Managing timelines: As with the budget, project managers are tasked with keeping everything on schedule so the team is meeting their projected deadlines for completion. This will require setting realistic deadlines throughout the lifecycle of the project, communicating consistently with their team for status updates, and maintaining a detailed schedule.
  
• Engaging stakeholders: Stakeholders play a large role in your project. They are typically influential people who are affected by the project. Project managers need to maintain a good relationship and an open line of communication with stakeholders who can not only help clear roadblocks and empower your team, but also create unnecessary bottlenecks and derail a project if they become unhappy with the direction.
• Handover the project: Just because the project’s objectives have been delivered doesn’t mean a project manager’s job is over. The project manager must now deliver the project to the team who will be managing, maintaining, and operating it moving forward. At this point, the project manager will no longer be the “go to” person, and will be assigned to a new project.
• Document the process: Identifying and documenting “lessons learned” is not only a good practice for personal project manager growth, but also for relaying that experience to other teams around the organization for future use. This will help others avoid making the same mistakes, or taking advantage of shortcuts discovered.

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Conclusion

There are a lot of moving parts at play when launching a business, building a business plan, and growing your revenues over time. But before you start working 80 hour weeks and hoping your idea will pan out, be sure you have formulated a very well positioned business concept that will solve a key need for some niche, both today and into the future. If your concept does not pass that test, it’s worth taking a moment to re-evaluate the scope of your offering. In the end, you will save yourself a lot of time and effort, and reduce the risk of failing along the way.