Running a Business

Running a Business

Running a business can be quite challenging for several reasons. Of course, mostly because the business world is competitive, and a multitude of factors determine whether a business will be successful. Often, people say that a business will be successful if it stays afloat for over a year, although there are other points of view. For example, economists suggest that as long as you can cover your fixed costs, then you should keep the business operational.

The main activities of a business are financing, operations and investing. Investing is a very large part, especially since most startups require investment or initial capital. At times, it may take a business a while before finding a niche in its industry and make profits. Large corporations, such as multinational business firms, may even redistribute part of the profits in the form of dividends.

One way companies obtain cash flow to ensure smooth operations of the business is through shareholders equity. When companies go public, they sell shares (commonly known as stocks) and obtain equity capital. Along these lines, IPOs (initial public offerings) represent very important events for firms. Interestingly, insider information often plays a role on how profitable such initial sales of shares may be to a particular investor.

Ernst and Young. Statistical tools and mathematical models greatly facilitate financial forecasting. Photo: Elena

Alternatively, regardless of the business, cash flow is important, but firms now have many other options for getting paid. Online banking, online shopping, mobile payments and wallets, have all designed new ways of customers and businesses interactions. However, while the Internet facilitates e-commerce (online commercial transactions) and virtual trade, it has also opened the Pandora's box of reviews, which when negative, can seriously harm the reputation of a brand.

Further, brand is a concept most closely related to marketing, and most businesses will at some point resort to some type of marketing. Indeed, virtually no business can survive and prosper without any advertizing and promotional campaigns. However, established brands such as Chanel may advertise their products in completely dissimilar ways than companies selling office supplies.