Working capital is defined as a process when a company has all those necessary funds to meet its daily financial needs.
From the very beginning, humans have had needs that needed to be satisfied. It’s obvious that in order to meet the needs of the society, some citizens had to take certain action that could guarantee other’s satisfaction. Till now, every day, we come across the word “business” or “businessman”. The reason is that business, itself, became an essential part of our everyday life.
Not too far ago, the definition of business was to resolve the production and distribution problems in certain areas. For instance, all of us need food, materials to build homes, shelters, etc. and the one's who provide us with these essential products can be called businessmen. Though, business can also be defined a bit differently.
Stephenson: "The regular production or purchase and sale of goods undertaken with an objective of earning a profit and acquiring wealth through the satisfaction of human wants."
According to Dicksee, "Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted."
Lewis Henry: "Human activity directed towards producing or acquiring wealth through buying and selling of goods."
Well, all of them agree that business is an effective and a prominent way to earn a profit and become wealthy.
Apart from these definitions, in order to achieve the desired results, it's crucial to understand the absolute laws of business success. As disappointing it may sound, 90% of today's startups fail in becoming a successful company, so it's highly possible that your business might join the failure list. Though, we can certainly try to avoid this awful outcome and by implementing certain strategies, we can minimize the risk of bankruptcy. Depending on the size of your organization, your first and foremost priority must be to maximally engage your employees in their works. Sure, team building isn’t an easy task, but it is directly connected with your staff’s motivation and productivity, which can drastically reflect on your company’s overall image. Furthermore, this way you can improve the employee relationships.
On the other hand, team building isn’t the only thing that helps your business to properly function. By this I mean, that business is an unbelievably big concept, that can’t be fully analyzed. After seeing the examples of the most successful companies today (for example, Google, Facebook, Twitter, Starbucks, Snapchat, Microsoft, Coca-Cola, Mercedes-Benz, Wal-Mart, McDonald’s, etc) it becomes clear that the only thing that made these companies a complete success, was the innovative ideas they had and the right business development strategies they have chosen . So, for your company to be successful, it’s vital to act wisely, take risks and always plan ahead.
The ability to be patient is as necessary as any other quality we’ve mentioned. For instance, if Howard Schultz gave up after being rejected by banks 242 times, there would be no Starbucks, if J.K Rowling stopped after being turned down by a considerable number of publishers for years, there would be no Harry Potter, if Walt Disney had stopped after his theme park concept was turned down 302 times, there would be no Disneyland. One thing is clear, if you're not patient enough or don’t have the courage to keep going, you’ll never know what opportunity you are missing.
Moreover, for the sake of higher profits, don't try to do everything by yourself because it's impossible for a single person the expertise in so many fields. There can be only two solutions for this.
1. Outsourcing - If a few years ago someone had said this, a great number of businessmen would have told him that outsourcing is the dirtiest thing in business. But, not anymore. The idea behind outsourcing is that one should discover a single field that comes to him the best and outsource the rest. For instance, if you're great in managing businesses, you should not definitely touch marketing, public relations, human resources, etc.
2. The second option is to ask your friends for assistance or to sell a little part of your business.
Despite all the important factors we’ve mentioned, we still couldn’t manage to cover every important detail that business encompasses. To run a successful business, it’s vital to create a proper business environment that will give your company the opportunity to properly function and develop. In order to make it more understandable, imagine business as a living organism that can’t live and improve in a vacuum because of its nature. When the leader is trying to keep the business in a vacuum, he’s practically, consciously failing his own company. It’s the law of the nature that we MUST be ready for the changes and constantly apply them without any hesitation, so if a company is trying to deny those environmental changes, they're bound to fail. Though, this broad description of the business environment isn’t enough to understand the concept in depth. It’s important for you to know that there are two kinds of business environment – internal and external and monitoring both of them is essential to reach the maximal potential of your organization. Though, the internal business environment is something we can control more easily because it happens within a company, for instance, employee attitude, innovation, IT, financial risks, etc. But, the external business environment is something we have no control of. The external business environment is connected with the government, country’s economy and competition. These are the factors that have the ability to severely harm our organization because with certain regulations it can easily collapse the whole firm. So, keeping an eye on the news and always being alert is a good thing to do, in order to minimize the damage received.
In conclusion, business was and is one of the most important fields today. Despite the benefits a single person may acquire, business can be highly beneficial for the society because it can help them progress and grow. Consequently, running a business carries a lot of responsibility that must be properly addressed. Furthermore, running a business is a great way to strengthen your contacts, improve relationships with other organizations and to raise your personal publicity.
In order to run a business, it’s essential to add the secret ingredient, working capital. [Read more…]
Distinctive competencies are the combination of the best practices and technical skills that increase the competitiveness of an organization.
If the question was asked years ago, the answer would’ve been that outsourcing is the dirtiest word in business.
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