Five Critical Elements of Business

Production

A product or service delivered to consumers is how a business generates income to operate. A successful product or service is developed through careful research that involves a marketplace needs assessment to determine where product/service gaps lie.

Do I have to be in charge of all five critical elements of business myself if I want to be an entrepreneur?
	NO! Many entrepreneurs are passionate about one or two critical elements and hire staff to manage/assist them carry out with the remaining elements. Entrepreneurs who try and manage all five areas find it difficult to develop their businesses effectively, and have little personal time.

Successful products and services are developed to fill these marketplace gaps by satisfying consumer demand.

Marketing

Marketing can be defined as the functions involved in transferring goods and services to the consumer. The marketing process typically involves identifying a consumer need, conducting research, designing a product or service to fulfill that need, product testing, packaging, selecting where to sell the product/service, product/service promotion and building relationships with customers.

Finance

Financial management for a business can be simplified into three basic elements of money management: the expenses, the income and record keeping. It is essential for business owners to know how much profit is being made, as well as their accounts receivable (who owes you money), accounts payable (who you owe money to) and taxes to name a few.

Location

A business location should take into account where its largest consumer base is located. For example, many food processing plants are located near large urban centres to decrease transportation costs and increase turnaround time to supply retailers. Location also consists of the actual physical structure of the building. Factors that influence the physical structure of the business are: interior and exterior esthetics (appearance), atmosphere (how clients feel when entering the space) and appearance of staff and management.

Human Resources

Staff play a large role in the success of businesses. Effective customer service creates relationships with customers; therefore, creating repeat customers for individual businesses. Human resource management is defined as the process of evaluating human resource needs and finding people to fill those needs by providing the right incentives and job environment to meet business objectives.

Source: Understanding Canadian Business, 1997