Introduction to Business
A business has to coordinate various factors of production to achieve a given objective. All factors are equally important for making the business a success. Organizational and financial planning should be correct, and various departments should cooperate. Modern business has become complex and complicated. The improvements in technology and changing consumer preferences are creating more challenges for businessmen. All aspects of an enterprise, i.e., production, financing, organization, and marketing, should be properly arranged and coordinated to make a business successful. Some pre-requisites for the success of business are discussed below.
Top Requisites of a Successful Business
Following are some major requisites:
- Setting objectives
- Proper planning
- Sound organization
- Proper financial planning
- Location and layout of the plant
- Marketing system
- Research
- Dynamic leadership
1. Setting objectives: Management must set business objectives to maintain a smooth stance. One must know what is to be done. Only after deciding on the goal will the methods and means to achieve it be determined. If it is a producing business, the nature of the product to be produced and whether to produce the whole product or part of it should be decided. In the case of a service business, the nature and type of service to be provided should be decided. It is not only the management that should be conversant with the business objectives; every person in the concern should know the aims and goals of the business.
2. Proper planning: After determining the objectives, the work should be planned from all perspectives. Planning involves forecasting and laying out the course of action. It involves planning for both the present and the future. What is to be achieved and how it is to be achieved are of primary significance for the present. The future is always uncertain, and the estimation of future happenings is very difficult. In planning for the future, an effort is made to estimate future uncertainties and determine the possible course of action for the coming period. Thus, planning also helps the management prepare itself for facing the uncertainties of tomorrow.
3. Sound organization: Organization is an arrangement by which tasks are assigned to employees so that their efforts contribute effectively to the achievement of clearly defined purposes. The duties and responsibilities of all people are defined, and they should know what they are to do. An effective organizational system is essential for the success of a business. First, a choice should be made on the ownership structure: sole proprietorship, partnership, or joint stock company. Then, an appropriate internal structure should be created. There should be no unassigned tasks. Both managers and employees should be aware of their responsibilities in the company.
4. Proper financial planning: The requirements for finance and its possible sources should be decided at the time of starting the enterprise. The purpose of financial planning is to make sure that adequate funds are raised at the lowest possible cost. The required capital should be there at all times; otherwise, it will hamper the work.
The scarcity of capital and too much of it will both be bad for the concern. The availability of excess capital may tempt the management to spend more money on inventory and fixed assets. A proper plan is necessary for providing funds for present needs and future developmental plans. A financial plan will determine:
- the need for capital,
- sources for collecting funds, and
- administration of capital structures.
5. Location and layout of the plant: The location of the plant is one of the crucial choices that the management must make when launching a business. The plant should be located in a place where all factors of production are available at the lowest cost. The aim of reaching an optimum point will be achieved only if the location of the business is suitable. Raw materials, labor, power, and markets for the finished products should be available near the location.
After deciding on the location, a decision is made about the layout of the plant. The setting up of the machinery and equipment should be systematic so that the flow of production is smooth and uninterrupted. The office building, warehouse, etc., should be located near the factory. Proper layout will enable the economical use of available space. The proper location and layout of the business are necessary for its success.
6. Marketing system: The marketing aspects of a business are more important than even production. There is no use in producing something if it cannot be sold. Marketing management is essential for earning profits. Management should choose the distribution channels. Whether to sell directly to consumers or through wholesalers should be decided after taking into consideration various aspects of the goods.
7. Research: In the changing technological world, it is essential to use the latest devices for the production and marketing of goods. Change is the essence of business. Every day, new production methods are found. Consumers’ needs and preferences should be taken into consideration when devising production and marketing policies. Research and development should be given their due place in business. One can compete in the changing business world only through research programs. If attention is not given to research work, then it will become difficult to stay in business for a long period of time. So, research activities are necessary for the success of an enterprise.
8. Dynamic leadership: The success of an enterprise will depend on the efficiency of its management. The task of management is to plan, organize, coordinate, and direct various activities to achieve business objectives. This is possible only if the leadership is dynamic. The operation managing the concern should have foresight, initiative, courage, and aptitude for change. These qualities are necessary for the leadership to take the concern on the road of progress.
