The human anatomy is very similar to the structure of a business. Just like you require different organs to perform diverse functions in daily life, a successful business also comprises various departments and components responsible for its overall growth and sustainability in today’s dynamic economic environment.
In order to run a successful enterprise, you not only need to have a detailed understanding of the various functional areas of business but also must design an effective business plan that will serve as an essential management tool.
Most business owners do not realise pre-planning is just as necessary as selling a service or designing a product. In fact, research shows that a lack of effective planning leads to as much as 80% of businesses failing within just five years.
On that note, here are some vital business areas you should know about.
Top 5 Areas Of Business
Mentioned below are the five primary functional areas of business.
- Strategy
- Marketing
- Finance
- Human Resources
- Technology and Equipment
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Strategy
Also known as the ‘brain’ of a business, strategy is one of the most significant components of everyday business operations. It involves designing practical vision and mission statements so that everyone involved in the business clearly understands what they wish to achieve, why they aim to achieve it, and how they plan to achieve it.
While curating the vision and mission statements, various factors come into play. Some of them include
- Analysing the competitor market
- Understanding industry-relevant trends
- Identifying potential business opportunities
Strategy is also responsible for positioning, branding and product differentiation, which is crucial, especially in today’s competitive market, with so many businesses selling the same products or services.
One of the most popular ways of forming an efficient strategy is with the help of a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. It not only gives you an in-depth analysis of your main competitors, but you also have a clear understanding of your position and potential in the competitor landscape.
Offered compensation in the relevant domain
Given the inherent need for strategy in business operations, there are plenty of job opportunities that you can also explore in this aspect. The average salary of a strategy manager is currently estimated at INR 18 LPA per annum.
Marketing
Marketing is another crucial area of business directly responsible for increasing revenue and creating a long-lasting brand image in the consumer’s mind. However, following an inside-out approach is one of the most common rookie mistakes business owners tend to make.
The idea is to
- Study the market
- Identify the target audience
- Understand their needs and demands.
A business’s marketing department involves many processes ranging from market analysis and product development to advertising, customer relationship management, and sales. Professionals in this field must stay up-to-date with the latest market trends to deeply understand customers’ pain points and take proper actions to rectify them accordingly.
Offered compensation in the relevant domain
Reports estimate that marketing plays a crucial role, leading revenue growth in nearly 38.4% of companies. Following its significance across organisations, marketing professionals in India usually receive an average compensation of INR 7.3 per annum.
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Finance
Finance is the backbone of every business, whether retail or e-commerce; finance is essential to keep a business alive and running. Depending on the size or type of business, the financial duties might differ across every industry.
Nonetheless, some of the most basic ones include investment management, managerial accounting, and financial accounting. This business area is vital for accurately assessing the financial health, projecting cash flow and for budgetary purposes as well.
A strong financial department can lead to robust financial benefits, such as
- Projecting a return on investments
- Determining the financial requirements of the business
- Establishing lines of credit
However, if mismanaged, it can result in huge losses for a company, especially for small businesses. A recent study conducted by the US Bureau of Labor Statistics concluded that as much as 20% of small businesses have shut down within the first year due to mismanagement of finance. By the end of the fifth year, the number rose to as high as 50%.
Offered compensation in the relevant domain
Keeping all the provided stats in mind, it can be safe to say, finance is one of the most important functional areas of business management, if not more. Therefore, it should be remunerated accordingly, which is why the average annual compensation for finance professionals in India is around INR 8.3 LPA.
Human Resources
Employees are deemed to be the foundation of every business. In order to make them feel valued and supported, deploying efficient human resource personnel is extremely important. The domain involves performing a plethora of administrative tasks related to talent management, such as recruitment, productivity and satisfaction of employees.
One of the most common mistakes new businesses tend to make is not prioritising HR as much as the other areas, such as finance and marketing. This could lead to a number of serious consequences- labour shortage being one of them. In fact, in 2022, the number of companies reporting labour shortages worldwide increased by as much as 28%.
Therefore, as a business owner, or a planner, you must know what attracts your employees and provide them with the utmost benefits to help them feel valued. This involves ensuring work benefits and lucrative compensation packages. Apart from these, the human resources department is also responsible for attracting new talents to a business, thus enhancing diversity and fostering professional development.
Offered compensation in the relevant domain
Managing one of the most crucial aspects of a company- its people, makes the role of human resource professionals indispensable. Hence, they are often rewarded with exceptional remuneration packages. The average compensation for an HR professional in India is INR 7.3 LPA.
Technology and Equipment
Contrary to popular belief, technology does not only refers to the equipment required to facilitate the business process. It also includes other relevant domains equally impactful to a business, such as communication tools for marketing or sales, transportation requirements, tech-driven strategies and much more. As a business owner, ensuring companies have access to in-demand technology and equipment while staying under budget is a responsibility that rests on your shoulders.
Furthermore, as an efficient planner, you should be creative enough to properly manage technology and equipment. For example, when a particular technology is quite expensive and requires implementation amid only a few tasks, it is advisable to rent in as needed. This will help the business save up on a lot of monetary resources, which can later be utilised across other business organs.
Offered compensation in the relevant domain
Accurate management of tech and related equipment influences the overall efficiency of an organisation; therefore, only skilled professionals must be employed to manage the said role. The average salary for professionals managing tech and equipment in India is around INR 12 LPA.
Conclusion
Comprehending various functional areas of business management and how they impact an organisation’s overall health and growth is the basic requirement to survive in the competitive market. Running a business might not be as easy as it seems. Most do not realise that a business plan is not just a piece of documentation prepared for lenders or investors. It is essentially a detailed guide to managing and shaping a business.
While a successful business requires an alliance of all the five key areas to function effectively, personnel working under it need more than just general business knowledge.
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