key functions of a business

key functions of a business

During this lecture, we will discuss the basics of business operations.

I’m willing to bet that if you were to ask five people what business operations mean you will probably get five different answers based on their personal experiences. For our purposes, let’s begin our discussion by defining what business operations really mean. Simply stated, business operations are the fundamental activities and operations of a business on a day-to-day basis to generate revenue and profit.

While business operate for a number of different reasons, generally speaking, a business will operate with three primary functions in mind. The three primary functions of business operations are:

• To generate income for the business
• To increase the value of the businesses assets
• To make sure that income and profit for the business is continuously generated and maintained

Simply stated, and I will use a made up example, let’s say that CoolKicks manufactures and distributes middle-high end athletic shoes as the sole source of recurring income for its business operation. If CoolKicks has only occasional large contracts that come in which provide periodic large bursts of revenue from these individual projects, over time, they will likely fail. On the other side of the coin, if CoolKicks operates by consistently having medium sized contracts roll in for different projects bringing in revenue, which are all generating income at a steady rate, it will probably do very well, make sense?

While there will be fundamental differences in how businesses operate, there are SIX key functions that all businesses need to address just as part of doing business. We will identify and discuss these key functions below.

• Financial/Records Management – includes things such as bookkeeping, insurance and recordkeeping
• Legal Management – need to be sure all the operations of the business are legal such as business licenses, contracts with suppliers, and organized under the correct legal form business
• Operations Management – someone needs to be responsible for running the business on a day-to-day basis
• Marketing/Advertising – need to make sure customers know about the businesses products or services either by radio, TV, print, etc.
• Office Management – need to have a space to operate the business and the right equipment to achieve its tasks.
• Production – needs to be a production process in place to satisfy the customers’ needs