The goal of any commercial enterprise is a financial result, and not a momentary result, but a result for many years to come. And this result includes both profit (or derivatives from it) and the company’s capitalization. There is a group of basic elements, the presence of which, with a high degree of probability, guarantees an increase in the efficiency and stability of the business over time.
The proposed criteria can be used as an enterprise self-diagnosis test. By analysing the use of these elements in the enterprise, a manager or a business owner, from the perspective of an external consultant, can analyse the performance of the business in the long term.
Understanding the Market Positioning and Competitive Advantages of Your Enterprise
Any enterprise has alternatives in organizing the distribution of its product, which are formed by:
- multiple distribution channels;
- a variety of end-consumer requests and ways to satisfy them;
- various options for a set of actions to maximize the approximation of the product to the target group of consumers (or vice versa, attracting consumers to the firm’s product).
The essence of the policy of the enterprise in the field of sales is the choice of orientation and the way to satisfy the needs of consumers. As a result of the availability and knowledge of the sales policy by the employees:
- the company as a whole is aware of its competitive advantages;
- specialists receive a tool for interacting with clients;
- uniformity of actions of employees of the enterprise at all levels is formed.
Planning the Result and Ways to Achieve It
The basis of enterprise efficiency is the determination of the maximum but achievable goal and the ways to achieve the goal set for the enterprise in its dynamics — the development of a strategy and the creation of a strategic enterprise management system. Planning sequence:
- Defining the mission of your business;
- Goal setting;
- Assessment and analysis of the external environment in which your organization operates;
- Researching the strengths and weaknesses of the organization;
- Determination of criteria for analysing the effectiveness of the choice of a strategist;
- Development of several alternative strategies;
- Choosing the optimal strategy;
- Implementation of strategies;
- Assessing the implementation of strategies.
Reduced Fixed Costs
Today, in most companies in Nigeria, the trend continues — the share of fixed costs is growing, and the share of variables is decreasing. Companies produce products with low direct costs. The bulk of the costs is for research and development, marketing, logistics, general production and management costs. Various methods can be used to reduce fixed costs:
- stop a part of production spots;
- expand missing capacity or reduce excess;
- reduce the wage bill.
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Outsourcing Auxiliary Functions
Specialized companies tend to be more efficient in supporting your business than you are. For instance, the transfer of office printing functions reduces the cost of maintaining a staff of system administrators and eliminates the need to purchase consumables. This is an indicator of how the cost of functions can be managed. At the same time, as with any choice of a manufacturer, it is necessary to assess the cost of the process and the real effect because when a function is outsourced, it is rarely possible to save on the entire cost of this process.
Optimization of Purchasing
If a company, especially a material-intensive one, manages procurement correctly, it can significantly reduce costs and working capital requirements. The company must ensure the correct planning of the needs for raw materials and materials in terms of volumes and delivery times so that the purchased materials do not become a dead weight.
Business Process Automation
For a complete vision and control of the business, companies often resort to process automation. When introducing automation, entrepreneurs sometimes make more mistakes than in doing business. It is often believed that implementing a system is the solution to a problem. But you need to understand that the system itself does not solve the problem, it automates it. The company must clearly understand what processes need to be automated and how. Today, companies are increasingly attracting specialists and methodologists to projects who know how and why to build the logic of a particular process, as well as to establish a connection with related processes.
The choice of tools and their configurations also plays a crucial role. For instance, some companies are mistaken when they choose one platform to automate all business processes. There are separate tools for automating specific functions (such as production management, customer relationship, budgeting, etc.). Since the ERP system, due to its versatility, is not the best in individual industry solutions, the implementation of a specialized system (for example, CRM) will be better than any similar module that is in the ERP system. Depending on the type of activity and tasks of the company, it is necessary to build its own IT landscape and find a balance between ERP and specialized solutions.