5 Functional Areas of Business You Need to Know as an Entrepreneur

It’s no secret that entrepreneurs wear many hats. Especially when you are first starting out, and sometimes even until retirement, small business owners have a lot to do. It is no wonder so many businesses fail: there is so much to know and apply to be successful in business.

What’s most important to focus on? How do you organize it? What do you really need to know to run an organized and profitable business?

Every business can be broken down into 5 functional areas:

Leadership
Operations
Finance
Team
Sales & Marketing

These 5 functional areas cover every aspect of business management. At some point, along your entrepreneurial journey, all small business owners will need to put systems and strategies in place in each of these areas.

Of course, these are broad topics. What does each one actually cover?

Over twelve years in the field as a full-time small business coach, my goal was to categorize everything small business owners needed based on my own experience of building, running and then selling my own organized and profitable small business.

Operating from my core value of integrity, I had to get it right.

As a result, I came up with 52 core competencies that fall under each functional area of business. I have written, challenged, re-written, and challenged again each competency. I had to ensure that what I was claiming was at the absolute heart of what was needed. The results are visually represented below on the Small Business Board Game.

The Small Business Board Game

Mục Lục

A breakdown of the 5 Functional areas of business

Functional area of business: Leadership round icon

Leadership

The most important element of your business is YOUR leadership.

As the leader of your business, you learn how to articulate, document and share your future vision, and consistently fulfill your promises to customers. You meet challenges and take advantage of opportunities to grow your business. You also take the time to improve your quality of life improves by taking care of yourself, your own energy, health and well-being.

With mastery over this functional area of business, your business will operate more efficiently while generating more time and profit for you, the business owner.

You can improve your leadership by working on the following competencies:

Vision
Values
Promise
Lead
Energy
Goals
Communicate
Change
Trust
Purpose
Family
Health

Operations

It’s guaranteed that every time you experience a problem in your company, there is a missing or broken system in your operations. A system gets your workflow organized, streamlined and focused. Once you shift your entrepreneurial mind to think in systems, you will gain control over the results that your company produces.

When you understand your operations, you will gain confidence in your product/service quality and gain the freedom to innovate and strategically plan for the future.

Want to work on your operations? Try focusing on these competencies:

Strategy
Structure
Systems
Service
Production
Technology
Monitor
Manage
Supply
Facilities

Finance

“If you can’t pay yourself enough to live comfortably, there’s little point in working for yourself.”

– Beverlee Rasmussen, CEC, PCC

If you want to be successful, you must know where your money is going and where it’s coming from. Do you feel confident in the following?

Do you know what it costs to build each product and to run your company?
Can you set reasonable goals to predict future sales so you can plan for growth and profit?
Do you charge enough to cover your production costs, pay yourself a meaningful wage, and plan for future growth?

Your finances are vital to your company. When you understand and track your finances, you will feel confident in your company and have the security to be generous with your wealth.

You can enhance your financial literacy by paying attention to the following:

Rewards
Funding
Tax
Debt
Cash
Profit
Expenses
Revenue
Reports
Record

Team

For small business owners, the greatest expense and reward is building a team. There’s many duties that come with leading a team such as figuring out how much to pay them, monitoring their work, hiring new employees and firing if needed. Now with Covid, you have the added responsibility of keeping them safe and making sure they can feed their families.

Great bosses have systems and structures in place which strengthen their company culture and provide an optimal working environment. These systems support their employees by eliminating errors and empowering them.

With a greater understanding of how to organize, inspire, lead and communicate with people, your organization will develop a company culture that will attract new talent and help retain a productive, loyal team.

Competencies that fall under this functional area of business are:

Organize
Compensate
Contract
Hire
Train
Delegate
Motivate
Measure
Culture
Coach

Marketing & Sales

Marketing is a set of processes for creating, communicating and delivering value to customers and for managing customer relationships. The more you understand your customers, what they want, need and expect from you, the faster your business will expand. Marketing is as much about the experience of doing business with you as it is the actual product or service you offer.

Now that you have built a great company, it’s time to let the world know you are ready for business. Laser-focus your marketing efforts to attract the exact customers who will appreciate the value you bring to the market.

Want to grow your marketing and sales? The competencies will help:

Retain
Data
Network
Sell
Promote
Brand
Place
Price
Product
Target

Understanding each functional area of business

It will take time, patience and dedication to learn and implement these foundational competencies. Be patient and don’t be afraid of continuous improvement. There is always room to grow. You can do this!

Which functional area of business are you going to focus on first?

Until next time, enjoy your Entrepreneurial Journey!

Beverlee Signature