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Blog posts of '2022' 'July'

(0) What is Enterprise Resource Planning (ERP)?

Enterprise resource planning, or ERP for short, is a comprehensive software platform used to help a business run more efficiently and effectively, by automating core processes.

An ERP system can take orders from customers, manage financial records, update inventory after each sale, and anticipate labor needs based on the level of orders received. In addition to managing processes, ERP systems also gather, store, and analyze data from internal functions, such as marketing, manufacturing, accounting, facilities, and research and development.

What an ERP System Does

ERP systems integrate, or connect, many different modules that make up the system. At the center of the system is a giant shared database that all departments in the company can access and use. That database can provide information about:

  • Customers
  • Suppliers
  • Products
  • Orders
  • Shipments
  • Payments

The Biggest Advantage

While ERP systems are complex and multifaceted, their biggest advantage is that by connecting all aspects of a business in one business management system, it is very efficient.

Picture the process involved in selling a product. A customer buys a comforter from your bedding store. Your ERP system takes all of the customer’s information, as well as their credit card details. It automatically checks to be sure the comforter is in stock and virtually sets it aside to be shipped to the customer. The ERP system notifies shipping that an order has been placed and sends along the address to which it needs to be mailed, as well as a packing slip and a shipping label. As the order is being ready for shipment, another part of the ERP system is reducing the inventory by one, checking projected sales, and alerting production that more fabric needs to be ordered to make more of those popular comforters to keep up with demand.

By having the system automate the process of information sharing, the customer’s name and address don’t need to be repeatedly entered at every step of the sale. Inventory doesn’t need to be checked and rechecked. And raw materials are ordered in just-in-time fashion to ensure that new comforters are being made at the same pace as the completed ones are being shipped out the door.

A Corporate Tool

While ERP systems are essential today for most major corporations, they are not typically seen in small and mid-sized businesses. It’s not that they couldn’t help automate critical processes, only that the cost is prohibitive for many smaller firms.

(0) What is a Stock Keeping Unit (SKU)?

SKU (pronounced “skew”), short for stock keeping unit, is used by retailers to identify and track its inventory, or stock. A SKU is a unique code consisting of letters and numbers that identify characteristics about each product, such as manufacturer, brand, style, color, and size.

Companies issue their own unique SKU codes specific to the good and services it sells. Two companies selling the same item, such as yoga pants, would likely issue two different internal SKUS.

The purpose of SKUs is to help companies more accurately and quickly account for every piece of their inventory. They are different from model numbers, but model numbers can be incorporated into a SKU if a company so chooses.

Where SKUs are Used

You will typically find SKUS in use in:

  • Warehouses
  • Retail stores
  • Catalogs
  • Etailers
  • Product fulfillment centers

How SKUs are Formed

Companies have their own systems for creating unique SKUs, but there is always a specific method involved.

A SKU for a pair of purple Ugg boots in the Bailey Bow style, size 7 might look something like this: UGG-BB-PUR-07.

Or a bottle of Tropicana orange juice, no pulp variety, in an 89-ounce plastic bottle might be issued a SKU by a corner bodega that reads: TROP-NP-PLAS-89.

There is no set way to create a SKU, but companies that develop their own system will want to have a method that everyone follows and understands, so that it is easy to decipher the code. SKUs are human readable, meaning that you don’t need any equipment to read and break down the code.

What a SKU is Not

SKUs are sometimes thought to be synonymous with UPC bar codes, but they are not. A SKU is an internal code that each business can create for itself. A UPC, however, is the same no matter who sells the product.

(0) What is Outsourcing?

Outsourcing occurs when a business pays an outside supplier to provide goods and services, rather than doing the work in-house. The practice started in the 1970s and grew popular in the 1990s as a way for companies to reduce their internal cost structure.

The global outsourcing market amounted to $88.9 billion in 2015, which was down considerably from the $104.6 billion spent in 2014, according to Statista. India, China, and Malaysia are the top three countries to which companies outsource. But that doesn’t mean companies have to send business outside the U.S. – outsourcing refers simply to having work done by a non-employee of your business.

Perhaps the most commonly outsourced service as of the 2010s is telephone customer service, which major corporations outsourced to companies in India because the cost was a fraction of what American companies charged. But outsourcing can occur on a smaller scale, too.

Don’t want to hire a full-time public relations (PR) manager? Turn your PR work over to an independent contractor or PR firm that is paid based on the work completed. Hate the liability of having employees do deliveries to customers? Hire a local delivery firm to do it for you.

On a larger scale, a dress designer might outsource belt manufacturing a company that specializes in leather. An electronics manufacturer might outsource the assembly of some of its parts to another company.

To Outsource or not to Outsource

Outsourcing only makes sense when the cost to buy goods or services from an outside vendor is much lower than the cost to deliver the service or manufacture the product in-house. However, many companies have discovered that cost is not the only consideration when evaluating outsourcing as a strategy.

While many overseas vendors can deliver lower-cost goods, they are not always at the same quality level. Some online retailers that have outsourced technical support to non-English-speaking countries have discovered their customers have difficulty communicating with the phone operators, creating dissatisfaction the retailers hadn’t anticipated. Consequently, some businesses are shifting work back to the U.S., despite the higher costs.

Outsourcing’s Disadvantages

While outsourcing can be a smart way to reduce internal expenses, there are potential downsides, too. By shifting responsibility for parts of your operation to other companies, your human resource capabilities will become more limited. That is, you’ll have more specialists than generalists on staff. This will make it more challenging to remain flexible if the market shifts. It also dampens creativity.

Not only that, but outsourcing can wreak havoc on your production if something catastrophic happens at your vendor’s location. For that reason, it’s best not to become too reliant on any one vendor. And keeping core aspects of your business in-house can help protect you from disruption.

(0) What is Entrepreneurship?

Entrepreneurship is the process of developing, organizing, and running a new business to generate profit by solving consumer problems, while taking on financial risk. 

Entrepreneurship is now a popular college major, with a focus on studying ideation, new venture creation, and profit driven models.

Pros

  • Work flexibility
  • Freedom
  • Unlimited earning potential
  • Total control
  • Able to make decision quickly
  • Creative
  • Able to follow passions

Cons

  • Financial risk
  • Time demanding
  • Personal Stress
  • Greater responsbility
  • High competition
  • Unreliable income
  • Long working hours

What is an Entrepreneur?

An entrepreneur is someone who has an idea and who works to create a product or service that people will buy, by building an organization to support those sales. An entrepreneur takes on most of the risk and initiative for their new business and is often seen as a visionary or innovator.

Entrepreneurship can be found in small business owners, content creators, startup founders, or anyone who has the ambition to build a business and work for themselves.

Common traits for entrepreneurs

  • Enjoy freedom and flexibility
  • Are inventive
  • Are goal orientated and ambitious
  • Think creatively
  • Are fearless
  • Problem solvers
  • High self initiative
  • Understand basic finance principles

7 types of entrepreneurs

What is the entrepreneurial mindset?

The entrepreneurial mindset is the attitude someone has to building a business. It means having an open mind, questioning everything, and being resilient. 

Common Entrepreneurship Requirements

Beginning a start-up generally requires:

  • A business concept or idea involving a product, service, process, or new technology
  • People to support the work, whether as employees, vendors, or advisors
  • A process by which the product or service will be delivered, or the technology will be developed
  • Enough funding to support the development of the idea to the point that it generates revenue
  • A peer reviewed business plan

Why New Businesses are Started

According to research by Cox Business, the main reasons people engage in entrepreneurship and go out on their own, rather than staying employed, are:

  1. Control: to be their own boss
  2. Ambition: to start something from scratch themselves
  3. Financial: opportunity to earn more money

In fact, an Intelligent Office study reported that 65% of employees would rather be entrepreneurs than work for someone else.

Decide What Kind of Business to Start

Finding a need or opportunity in the market and filling it is at the core of entrepreneurship and small business success. That doesn’t mean that starting a business similar to one already in existence can’t be successful, however.

In considering what kind of business to start, assess:

  • Your interests and passions
  • Your background and experiences
  • Your financial resources
  • Unmet market needs
  • Problems you can solve
  • Your network and connections

With an estimated 50% of new businesses failing in the first five years, entrepreneurs will also need to be committed, persistent, and adaptable to beat the odds.

(0) What is a Business Proposal?

A business proposal is a document that’s designed to persuade an organization to buy a product or service.  

A proposal is usually solicited or unsolicited – meaning, that the purchasing company is either actively seeking proposals that meet a specific need or is reacting to an offer, often from a sales person, to consider a proposal. For example, an unsolicited proposal might result from a dinner conversation at a trade show where the seller tells a prospect that he has a solution to the prospect’s problem, and says, “Would you like me to submit a proposal for that?”   

Solicited Proposal Language

Companies use a range of acronyms when soliciting business proposals from vendors:

  • Request for information (RFI) – This screening tool often precedes the proposal solicitation process. It’s designed to help the buyer understand which vendors are in the best position to provide what’s needed. 
  • Request for proposal (RFP) – In addition to outlining what the customer needs, this document also details not only what it wants to receive from the vendor in the proposal, but also how the proposal information should be organized and presented. An RFP is often used when the buyer needs to evaluate which company is the best vendor based on a number of factors besides price.
  • Request for quotation (RFQ) – These are used when price is a primary factor in the purchasing decision, but not the only one. The buyer might need information about product availability, delivery times, and other specifics. Proposals responding to RFQs are often shorter than those for RFPs.
  • Invitation for bid (IFB) – IFBs are used to solicit services based primarily on price. Most simply put, they’re a request for a response to the question: “What would you charge to do this?”

Business Proposal Elements

While business proposals can take the form of a less-structured proposal letter, they are often long documents that might include anything from engineering specifications to equipment lists to project staffing, depending on what’s requested in the RFP.

Vendors responding to RFPs must always follow the buyer’s preferred, stated format with the proposal. Common elements requested, which can also be used in unsolicited proposals, often include:

  • Cover letter
  • Cover page
  • Executive summary
  • Table of contents
  • Overview or summary of the problem or need
  • Strategy or approach to solving the problem
  • Representative tactics
  • Company qualifications
  • Schedule
  • Costs

Business proposals can be as short or as long as necessary to communicate required information.

(0) What is Ecommerce?

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers specifically to the transaction of goods and services.

The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a man sold a CD by the band Sting to his friend through his website NetMarket, an American retail platform. This is the first example of a consumer purchasing a product from a business through the World Wide Web—or “ecommerce” as we commonly know it today.

Since then, ecommerce has evolved to make products easier to discover and purchase through online retailers and marketplaces.  Independent freelancers, small businesses, and large corporations have all benefited from ecommerce, which enables them to sell their goods and services at a scale that was not possible with traditional offline retail.

Global retail ecommerce sales are projected to reach $27 trillion by 2020.

Types of Ecommerce Models

There are four main types of ecommerce models that can describe almost every transaction that takes place between consumers and businesses.

1. Business to Consumer (B2C):
When a business sells a good or service to an individual consumer (e.g. You buy a pair of shoes from an online retailer).

2. Business to Business (B2B):
When a business sells a good or service to another business (e.g. A business sells software-as-a-service for other businesses to use)  

3. Consumer to Consumer (C2C):
When a consumer sells a good or service to another consumer (e.g. You sell your old furniture on eBay to another consumer).

4. Consumer to Business (C2B):
When a consumer sells their own products or services to a business or organization (e.g. An influencer offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use).

Examples of Ecommerce
Ecommerce can take on a variety of forms involving different transactional relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions.

1. Retail:
The sale of a product by a business directly to a customer without any intermediary.

2. Wholesale:
The sale of products in bulk, often to a retailer that then sells them directly to consumers.

3. Dropshipping:
The sale of a product, which is manufactured and shipped to the consumer by a third party.

4. Crowdfunding:
The collection of money from consumers in advance of a product being available in order to raise the startup capital necessary to bring it to market.

5. Subscription:
The automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel.

6. Physical products:
Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.

7. Digital products:
Downloadable digital goods, templates, and courses, or media that must be purchased for consumption or licensed for use.

8. Services:
A skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for a fee.