Concept of Business:
A business Concept is the core idea of your operations.
It establishes a foundation for the business. The business concept is the outline for what is the intention of your business.
Are you going to have a fresh start, or You are adding a new product to your product line?
You must be clear with,
- The purpose of the idea creation
- The market it is covering
- The targeted solution
Another aspect of the business concept is financing. Business needs to have robust planned finances.
The start of the new business and even the product addition in the existing product line is a costly affair.
Everyone starts a business to earn profits. Managing the cost and having a pricing model as per your cost and your desired revenue growth may lead to a profitable business.
Term Cycle
The business should follow a set period with intervals for the inspection of profits and losses and the expenses incurred in the organization in that particular period.
It helps the business to analyze and compare the two periods, helping them to create strategies for the next term. Generally, April to March is considered an accounting period in most countries.
For example: If a business owner prepares books of accounts for his business from the last few years, he can analyze the profits & losses, and expenses to look at the scope of correction.
Transparency
A business needs to disclose relevant information to their stakeholders, but by no means does it states that a business should disclose their business secrets.
The relevant information is different for different people. For a creditor, relevant information could be the ability to repay the debt of the business.
For example, A company should publish their detailed balance sheet For the present shareholder and the public willing to invest in your company.
Contingent liabilities are shown as the footnote in the balance sheet.
Contingent liabilities:
Value-Based Addition in the books of accounts
Contingent liability is a liability that may or may not occur. Mostly it depends upon the future results.
It is important to disclose the relevant information, but it doesn’t mean to disclose irrelevant information.
The company needs to disclose the information that holds some material value to them. Material value could be different for different people.
For example, 1 unit of mobile may not have a great significance for the mobile manufacturing company but the retailer selling that mobile has.
If anything happens with the mobile like damage, manufacturing companies need not show that in accounts, but the retailer should create the entry in his books of accounts.
Cost Element
An asset should be recorded on the cost it is acquired.
Acquired cost means the original cost of the Asset Plus any modification or installation made to the original asset. Further calculations will be subject to the price recorded in the books of account.
A change in the value of the asset will not have any impact.
This asset will lose its value over the years as depreciation will be applied.
For example, a company purchases a piece of furniture for $300 and pays $20 in installation.
The cost of machinery will be $320, and depreciation is applicable on this amount.
Find Your Customers
Market research plays a significant role for the business because you want to know where your audience is.
Most of the time, consumers’ needs are dependent upon the environment in which they are living.
For instance, a person living in a colder climate will be less likely to demand an air conditioner than someone living in a warmer place.
First of All, target your audience as per their intent, demographic conditions, and the resources
Available.
Market research will not only tell you about your potential customers but will also tell you about your competition and what they are doing to retain their customers.
Competition analysis Helps you to identify The dos and don’ts of the market.
Market research and competition analysis will give you enough data to perform a SWOT analysis.
Solution:
As we have identified the problem and also did our market research.
Now it’s time to serve our customers with the desired solution to their problems.
Customers want to have their life as simple as possible. Make their lives simple with your product.
For example: If your audience is a big-time food lover but also wants to track those calories to stay fit, you can try to find out the source to make your food healthy yet tasty, like providing them with the option of having a sandwich of brown bread instead of white bread.
These things may look insignificant for a shorter period, but they will make your customers feel special.
Product Flexibility
Flexibility plays a significant role in providing the best possible product to their customers.
Flexibility helps to cater to the audience for their satisfaction.
It helps the organization to increase their market share to earn profits and future-proof their business.
Flexibility could be mainly of two types:
Production-Based Flexibility:
Production-Based flexibility is the process of shifting the production of goods from one product to another.
It can be helpful for the business to produce different products in small batches.
For Example, A bakery business catering to different products like cakes, biscuits, donuts, and related products needs certain flexibility.
Their bakery can get the demand for different products from different customers even within a day.
Volume-Based Flexibility:
Volume-Based flexibility states that an organization must know how to increase and decrease its volume of production as per the market condition.
It is not cost-effective to produce a higher volume of product, whose demand fluctuates with time. Organizations having these kinds of products need to have their resources flexible.
