Article provided by Business Doctors
The ‘core’ is the primary area or activity that a company was founded on or focuses on in its business operations. The coronavirus crisis has threatened many businesses and the need to focus on ‘core activities’ is paramount but what if the core has eroded away or even disappeared overnight, or the business is not clear on what its core really is? This article looks at strategies identify and develop a strong business core and develop new business opportunities.
So what are core business areas?
Generally speaking, core business functions are areas where you try to innovate and build competitive advantage, and non-core functions are areas where you follow best practice and attempt to compete with minimal resources and are often outsourced.
When the core becomes threatened, challenges arise. Take the example of the high street where we have seen numerous bricks-and-mortar businesses go to the wall as revenue was too heavily reliant on physical footfall. In many cases the core business of retail outlets on the high street was already in demise and the pandemic simply hastened it.
As a small business owner, your short-term cash flow depends on providing customers with goods and services during the crisis. Your business’ long-term viability depends on understanding how their needs will be different when the pandemic is over.
The first thing to consider is that people are building new habits right now and it is important for you to figure out how to continue to offer services that deliver value during the crisis, which in many cases will require rethinking your business model and the move online to e-commerce and digital will need to occur.
How will the post-pandemic world change your business?
So, given that your core never lasts forever, think about how the post-pandemic world will change your business. Evolve your customers in your planning process. A simple exercise can help you. Ask the following six questions:
- Many of your customers will still be worrying about the risks of contagious disease. Some of them may have decided that they like ordering online. Reach out to them and ask how their lives have changed.
- How profitable are your customers and how loyal?
- What is your company differentiation in the market – is it strengthening or eroding?
- Where can you find the best profits in your market? Who earns them now? How might that change?
- How do your capabilities give you a competitive advantage? Is it your highly skilled people or perhaps you combine business processes that create hard-to-replicate competitive advantage? Maybe your insight into your customers is far superior?
- The organisation’s culture – is the company united around a common purpose? Are the values of the organisation understood and shared by all? It will be essential to understand this as the company embarks on any change, restructuring or growth as the staff will need to buy in to any new strategic direction.
At the very least, owners who go through this exercise tend to spot areas of weakness to be shored up. At most, they may save a business from going under.