Do you have a company and still don’t know what Core Business means or have doubts about it? In this article we explain why it is so important and what it is about.
What is core business?
The term Core Business refers to the main activity of the company, which must generate profitability and position itself in advantageous positions within the competition.
It is necessary to focus on the central activity of the company; define the core business and what will be the special contribution that will distinguish it from the others, giving it added value and consequently, a greater growth and positioning within the market.
This merits devoting all efforts to the development of specific areas of the core business, without affecting the aggregate for the operational gear of the company.
Identify the core business of your company
First of all, you must make an in-depth analysis of your company’s activity, both internally and externally, which reflects the competitive advantages of the products or services you offer.
Focus on what you know how to do, on those strengths that will make you stand out from the competition.
Another important point is to know for sure what makes you different from others. Other companies in your business area do not necessarily have the same core business.
Don’t forget the added value. This is going to be your most powerful weapon to compete. It’s always attractive if your product or service offers something that other companies don’t offer.
Analyze your suppliers. Quality of their products, prices, delivery dates among others.
Make a study of all the areas of your company and your work team, of the problems that have arisen and that have affected in one way or another the performance of the staff and the final results of the management. It is also important to know how they were solved.
Evaluate the possibility of outsourcing areas that have nothing to do with your business but are necessary for the proper functioning of your company. For example, consultancies that handle accounting, tax issues and human resources, among others.
Once you have analyzed the points mentioned above, you will be able to define exactly what the core business of your business is; what you are doing well, what corrections need to be applied and decisions to be made to improve.
You may also be interested in: How to start the digital transformation in your company
Why is it important to identify the core business?
Once you have identified your core business, you may be presented with multiple opportunities to develop your company, give it a competitive advantage, and put it on the path to unstoppable growth and diversification.
So, establishing what is the core business will allow you to focus only on what you really do well, putting aside activities that demand time, money and effort without any significant benefit or gain for your company.
Another advantage is that you will be able to adapt the company to the needs of the market, improving the price and quality of your products and services. Increase your production capacity and present to the customer a real offer of your business activities.
If you don’t know how to explain clearly what you are selling, you won’t be able to compete and you will confuse potential customers, who will look for and buy what they need by other means.
Once you understand what your core business is, it will be easier to plan the strategies that will lead your company to decide which are the areas where you should focus resources, time and efforts.
To know how to develop the business strategy you need to grow your brand and position yourself as a strong competitor in the market, we must first know where we are located and where you want to go.
That is why, from now on it is very important to be clear about the objectives of the company, to define how to work to achieve them. Anticipate every negative effect that can be generated, design plans in case of contingency and measure the results.
Now we want you to understand that it is not advisable to try to work on all the objectives at once. Why? This could cause a detour with very harmful consequences, so it is best to focus step by step on those that can be developed and controlled.
You may also be interested in: What are soft skills and why are they so important in day-to-day business?
Define the mission and vision
It is necessary to have a concrete notion of our core business, its mission and vision to help us in making decisions. We know that today’s markets are constantly changing and it is difficult to make long-term plans.
Determine opportunities and threats
Establishing with certainty what the core business of the company is, will allow us to know which path to take to develop action plans to improve the company and that can generate new business opportunities. In this way, we must know the following points:
Explore unmet needs in the market.
Determine who the competitors are and what products or services they offer at lower prices.
Areas of the company that can be developed to offer better performance.
Low production levels, too high production costs and non-priority departments that can be outsourced.
Taking into account the core business, you will be able to evaluate the innovations that you can apply and that produce more profitability for the company.
It is important to make the effort to invest enough resources to achieve the innovation that will lead you to position yourself as a strong competitor in the market.
Once you start developing your new strategies based on the real core business of your company, your competitive advantages will be noticeable and your business will start moving fast. You must follow the progress and if necessary, adjust your strategies.
New business models
We know that every entrepreneur wants to grow their business, and diversify it to achieve a space in markets related to their core business.
If the strategies applied have favorable results, it will be necessary to add other activities that support the activity of your company, as long as you do not sacrifice your core business.
It is possible to develop new business models and enhance those you already have, as long as they are based on your core business in order not to lose your business identity.
The most important thing is to strengthen your core business, this is vital to face situations in which you must gain competitiveness and maintain the profitability of the business.
If your market research shows that there are sectors that can give you a competitive advantage, you can opt for an outsourcing that allows the development of your brand without having to invest in the creation of new departments or hiring staff.
You may also be interested in: Scrum: Meet the framework that will improve your company’s productivity
The ideal is to keep your entire team focused on the core business, for this will require constant training of staff and constant communication with all areas of the organization to achieve synchronization and good management.
Defining the Core Business is not so simple, but it is necessary that your company has a clear identification, it is what will differentiate it from others operating in the same sector.
So, remember that there will always be something that your business does better than anyone else and that’s where you need to focus to achieve success. And if you need help identifying your strengths and weaknesses, our accounting and tax experts at TAS Consulting are ready to analyze your business. Contact us, we are your trusted partners!