Understanding your core business is essential to improving the way you generate revenue today and the way your business will generate revenue well into the future.
Let’s look at the definition of core business. It simply means your organisation’s main or essential activity. Another way I like to help people define core business is to simply ask, ‘what do you put on your invoice when billing your clients? What do you get paid to do?’ For example, if your business is a shoe store, then selling shoes would be your main and essential activity.
But let me share a less obvious example of core business. Where I’m from there is a large furniture and appliance retailer. Let’s call them the Big Shop. I grew up knowing that if I wanted to buy furniture or household appliances, I’d go to the Big Shop. But after thinking about the Big Shop’s core business, I realised it wasn’t selling furniture or household appliances. This company rented out each of the sections in their store to other retailers who sold the goods on offer. The core business of the Big Shop is not retail; it is leasing commercial space.
Understanding your core business is critical to how you make money right now. You'll be able to focus on improving the skills and the underlying processes to become more efficient or more productive in the way you generate revenue. Too often businesses spend time and effort on things that do not directly contribute to their core business. Their focus on what’s important is diluted and, in many cases, the business starts to lose revenue.
So why is this important to your future? Many businesses compete by having the same core business. However, your business could gain competitive advantage by becoming better at your main or essential activity. For example, maybe your staff have better customer service skills or maybe the time it takes you to deliver is faster than your competition. By focusing on improving the underlying skills or processes that produce the product or service, you improve your chances of beating your competition now and well into the future.
My takeaway tip for today is to truly understand what your core business is and focus your energies on improving the way you deliver your main and essential activities. Your future will thank you.