5 Components to Any Business and Key Parts of a Business System

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Each business has – or should have – these 5 main systems. Without one of them, your business will not fully function or may not even function at all.

Marketing

This is your general approach in finding customers, attracting them to your business and how to make relationships with them.
Most importantly, of course, is how you convert them into paying customers (hence “conversion”) and how to make them buy to you again (repeat customers). In a way, marketing touches after systems of a business, such as sales and client retention.

Sales

Most people get confused with marketing and sales. So, let’s clear this really quick: marketing and sales are different from one another, but sales is part of marketing. Sales is the side of marketing where you close deals or sales to, well, get the sale!
But sales in itself is not marketing – again, marketing is wider; sales is just a specific portion of marketing. That’s why salespeople aren’t necessarily marketers, though some tend to go from sales up to marketing.

Operations

This system is all about production and distribution. This is where all the technical stuffs come from – aside form production and distribution, we have warehousing, logistics, shipping, etc. Managing people in general also falls here as well, though each system has its own people.

Finance

Many entrepreneurs think that finance is only for their accountants and bookkeepers. Big mistake! The whole goal of finance is to manage your cash flow properly – so you make sure you earn profits, avoid unnecessary losses and avoid or manage debt. One function of finance is to see if the business spends wisely or unnecessarily. This is also where you make invoices, processing the payroll and where you get paid.

Client retention (repeat customers)

This is usually the customer service team. The goal of client retention is to make sure your customers would buy again at your business.

Usually, this is done by simply encouraging customers to return. If you see a slogan at a department store with something like, “PLEASE COME AGAIN!” that’s part of the client retention system.

These five components make up the Three Parts to A Business System

There are three key components to any business system;

Software

A modern business relies on computer software or applications to ensure the smooth functioning of the five elements of the business. We are in the modern world today, so your business must cope up with modern technology. If you still run your business like you’re in the 1930s, your way, way behind!

But don’t be overwhelmed. Most of these software are available even for small businesses. In fact, of many can be seen in the Internet, and you can access them with just one click.

Some of the software you’ll need to have are customer relationship management software (CRM), task management software (like Trello) and accounting software. They all speed up your business’ systems and help you do tasks with ease.

Process

This is really the joining up of the dots. How you flow through the five elements. How the software is used, and how the various bits of software integrate together.

Without putting the process carefully, your system may fail to coordinate with one another. For example, if you encountered a customer service rep telling you wrongly about a price or promo, most likely it’s because they failed to coordinate well with other systems – customer service vs. marketing/sales.

So, layout your process carefully. Be sure that the systems work well with one another, and quickly adjust to any mishaps.

Resource

The last part of the component – and the most important – is your resource. Your resource is people, your people.

They are the ones who will make your system work, hence they are the most important component of all. Without them, nobody will operate the software, and none will implement the process.

So, among the three components, you should watch very closely to your resource – or employees.

Don’t even treat them as your employees; treat them well, treat them as your team member! You’re all part of the team, after all.

Without the team, your business is virtually nothing. Without the team, your business won’t grow beyond a one-man operation – and that one man is you!

Unfortunately for many entrepreneurs, they treat the software, process and other components more importantly than their team members. They fret over a malfunctioning software but didn’t mind if they fired one of the best members in their team – they wouldn’t even bother considering the facts before making such decisions.

How you find people (hiring), how to manage them as one (management) and how to decide which one to bye-bye to (firing) is another article on its own.

For now, it’s important you learned how systems work and how to automate them.

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