What Are the Three Principal Types of Business Activities?
No matter how long you've been in business, your company's size or the industry you're in, you must perform certain business activities to keep your business running smoothly. Activities related to your product or service, finance and marketing are must-dos, so basic and critical to a company that to neglect them means going out of business.
Operations includes every activity needed to manufacture a product or provide a service. Operations is an essential business function, because without a product or service to sell, a business has no reason to exist. Operations activities will always revolve around acquiring raw resources, converting those resources into something to sell and scheduling and controlling the process of conversion. Activities to accomplish those aims include creating production schedules, taking inventory, equipment maintenance, measuring quality and efficiency, and designing workflows.
Without customers for its products or services, a company can't stay afloat, making marketing another crucial business activity. Marketing activities go beyond merely creating ads that entice customers. Instead, marketing activities are intimately connected with a company's products and services. Indeed, by understanding the needs and desires of consumers, those in marketing help shape a company's offerings. Marketing activities determine the needed performance specifications of a company's products and services, the proper pricing, the best distribution channels and packaging. Consumer and marketplace studies, promotion and sales also fall under marketing's purview.
The bottom line: Money makes business possible. When approached carefully, finance activities build a foundation for a company's security, ensuring future operations. Finance must measure operations to create forecasts predicting a company's ability to meet future challenges. Creating budgets, allocating funds throughout the company, determining investments, protecting assets, managing credit and preparing financial reports are other necessary financial activities. Two important statements companies typically prepare are the balance sheet, which shows a company's assets and liabilities, and the income statement. By subtracting expenses from income, the income statement reveals a company's profit or loss.
Besides operations, marketing and finance activities, other types of business functions become important as a company grows. With employees comes the need to manage a company's human resources. Important activities under the human resources umbrella include training and hiring. Once a company decides it wants to expand its offerings, research and development becomes an important business activity. Finally, though wise management is desirable at any stage in a company's life, growth demands a more conscious and formal approach to leadership, planning and organization than a one-person business might demand.