PRINCIPLES IN CREATING A BUSINESS
Description of the product
The principles of a business are the driving
forces that make it successful. Below the ten
key principles to make a business a success:
1. Scalability- A business must be scalable
for it to be successful. Scalability is the
capability of a company to sustain or improve
its performance in terms of profitability or
efficiency when its sales volume increases.
2. Big Ideas- A business is no more effective
than the idea upon which it is built. Business
creates its own plan to expand its economic
growth.
3. Systems- A business is a system in which
all parts contribute to the success or failure of
the whole. In this system, everything must
work together from employee to president;
from equipment to resources.
4. Sustainability- A business must be
dynamic- able to thrive through all economic
conditions, in all markets, providing meaningful
highly differentiated results to all of its
customers. Such differentiation is the key to
survival.
5.Growth- Growth is essential in business.
Without continued growth, operations will
stagnate. This can result in lowered standards
of quality for products or services, decreased
customer service, and poor employee morale.
6. Vision- A business must manifest the
higher purpose upon which it was seeded, the
vision it was meant to exemplify, the mission it
was intended to fulfil.
7. Purpose- A business is the fruit of a
Higher Aim in the mind of the person who
conceived it.
8. Autonomy- A business is not part of the
owner's life, but is, in fact, its own entity.
9. Profitability- A business is an economic
entity, driving an economic reality, creating an
economic certainty for the communities in
which it thrives.
10 Standards- A business creates a standard
against which all businesses are measured as
either successful or not. All businesses should
aim to thrive beyond the standards that
formerly existed.
TOOLS IN EVALUATING A BUSINESS
The following must consider in analyzing a
business
1. Geographic area
2. Size and outlook of the industry
3.
4. Identification of buyers (target market)
5. Regulatory environment
6. Knowing the competition
7. Factors that will affect the growth of the
business
SWOT Analysis
Year 1960’s when it was created by
business gurus, Edmund Learned, Roland
Christensen, Kenneth Andrews, and William
Book. It is an analytical framework that can
help a company meet its challenges and
identify new markets. It can help the
business identify the risks and rewards that
it may experience in a way of identifying
the internal and external forces that may
affect the business.
Factors to consider:
1. Internal Factors- these factors exist
within the premises of the business,
thus most of it are controllable. But
these factors can directly affect the
business performance. In SWOT
analysis, the internal factors there are
the strengths and weaknesses.
 Financial resources such as
money and sources of funds for
investment
 Physical resources such as the
company’s location, facilities,
machinery, and equipment
 Human resources consisting of
employees
 Access to natural resources,
trademarks, patents and
copyrights
 Current programs such as
employees program, department
hierarchies, and software
systems, sales, and distribution
capabilities, marketing programs,
etc.
2. External Factors- those influences,
circumstances or situations that a
business cannot control that affect the
business decisions.
 Political (tax, laws, political
stability)
 Economic (economic growth,
interest rates, unemployment,
inflation, exchange rates)
 Social (demographics, lifestyle,
tastes, trends)
 Technological (ICT, research
and development, automation, e-
commerce)
  Environmental (physical
conditions: climate change,
weather) (green credentials:
recycling, pollution)
 Competitive Factors (imitators,
price wars, product
differentiation)
Industry Analysis
It is an assessment tool used by businesses
and analyst to understand the competitive
dynamics of an industry. It also provides
insight into new opportunities or threats that
could affect the company. The data gathered
can be presented through graph, table, or
matrix.
Factors to consider:
1. Competition and Competitors-
Industry rivalry among companies of the
same or related industry is an inevitable
part of the business world of any
business size. Intense competition leads
to reduced profit potential for
companies in the same industry.
Businesses seek constantly competitive
advantage.
Competitive Advantage
 is what sets your business
apart from your competition.
 highlights the benefits a
customer receives when they do
business with you.  It could be
your products, service,
reputation, or even your location.
Different methods of competitive
advantage which it can be done and are
classified into four categories:
1. Cost Leadership- an advantage
occurs when business is able to
offers same products at a lower
price.
2. Differentiation- Find attributes
that is important and set them apart
from their competitors.
3. Defensive Strategies- used a
defensive strategy to distance
themselves from competitors.
4. Alliances- advantage of seeking
strategic alliance with other within
related or within businesses.
2. Customers- Individuals or companies
who desires to possess or make use of
products and services. They play a huge
role in the success of your business.
Customers likewise can force down
prices, demand higher quality or more
service, and play competitors off against
each other—all at the expense of
industry profits
3. Suppliers- Provide inputs that the firms
in an industry need to create the goods
and services that they in turn sell to
their buyers. Suppliers can exert
bargaining power on participants in an
industry by raising prices or reducing
the quality of purchased goods and
services. A business may need one or
more suppliers. It is important to
develop suppliers who are reliable in
terms of quality of what they supply and
their dependability in providing the
orders.
4. Substitutes
 Goods/services that can be used in
place for another. These goods may,
even if partly, satisfy the same needs
of a consumer such that the
consumer may use one for instead
for another. substitute products or
services limit the potential of an
industry.
 But not everybody will be willing to
switch brands because they have
developed a taste for a particular
cola. This is why manufacturers try
to differentiate their products from
their competitors so that the
customers will develop product
loyalty from their brand.
 For example, margarine can be a
substitute for butter the same with
Coke for Pepsi
TECHNIQUES TO BOOST PRODUCTIVITY
1. Use technology to speed up workflow-
Businesses should be looking to innovations in
technology to solve day-to-day inconveniences
and to increase efficiency.
2. Shorter meetings fuel efficiency- Hold a
brief meeting standing up, every morning,
where each person explains what they are
going to work on that day to ensure everyone
is on the right track and not wasting time on
non-urgent tasks.
3. Smart office space pays- Office space
can involve a big outlay for SMEs, but it is also
an area where some smarter thinking can
make a real difference.
4. Good Advertisement- Advertising keeps
your business top of mind so consumers think
of it when they require or need a service or
product.

5. Small changes, big savings- One way of

improving efficiency is for business owners to
make small changes to the way they handle
their company's expenses.

6. Keep a firm grip on cash flow-"Cash is

King not profit”. Ensure the right management
of your inflow and outflow of cash.

7. Stay connected on the move- The

growing trend towards mobile and flexible
working means that employees are
permanently connected and on the go.

8. Use time more efficiently- Being more

efficient is more about being than doing. It's
probably 90% mindset, (Allan, 2013). In
addition, “The shorter the amount of time you
allow yourself, the more you will get done”.

9. Get the best deal on insurance-

Businesses need insurance because it helps
cover the costs associated with property
damage and liability claims.

10. Don't be lax with the legal- In the

hectic process of starting up a business, the
founders often put off sorting out the legal
matters until later, or not at all.