5 Things Every Business Person Needs to Know (Part 5)
You may have already guessed the last topic in my ‘need to know’ series…yep, you need to know BUSINESS. And, there are two kinds of business: internal and external.
Internal business is basically your business. How does your business make money? That may seem pretty straightforward but not necessarily. For example, I volunteer to produce an annual educational conference. I know there are people who would say the conference makes money from the attendees. Not true. The attendees just cover expenses. It’s our sponsors and exhibitors that help us achieve our profit goal.
Also, knowing what contributes the most to your profit line is important (i.e. what items have the highest profit margin?) For instance, Mr. Bartender and I had lunch out the other day. What was served wasn’t exactly what we expected according to the menu. The manager came over and offered us dessert. He didn’t offer to take money off the bill…he just offered his apologies and dessert. Now, what do you think the chances are that dessert has a much better profit margin than discounting the check? Of course it does! He provided good service, gave us a gift (which we didn’t take) and we still paid the full check. Knowing how your business makes money allows you to keep customers happy and still produce a healthy profit.
External business means understanding how the world affects your business. When you read about oil prices, rice shortages and banks going belly up, how does that impact what you do? You can’t assume that all businesses are impacted the same way.
I used to work at a hotel where, when a hurricane was coming, the hotel got busier. No one needed to evacuate. At that time, the Sheriff’s Department actually used it as a command center. So while other places were losing money because of abandoned tourists, we were making it from the evacuating locals.
No matter who you are or what you do…you have to understand how all of the pieces fit together. And if you spend the energy to really know it, it’s really quite fascinating.
So let’s recap, successful business people know how to build relationships, manage projects, use technology, read financials, and they really understand their business. Do you have to be an expert at all of them? Not really. But you do need to have a decent working knowledge of them all. Will you use them every day? Maybe not. But when you need them, you want to have that ability.
If these competencies aren’t in your top five, think about a plan to get there. More on that in a future post.
0