A customer walks into your pizzeria carrying a lunch menu flyer. The cashier greets the customer and gets the order. A ticket is printed out and sent back to the kitchen. The ticket is reviewed and its details are relayed to the pizza maker who I just learnt is called a pizzaiolo (male) or pizzaola (female). If all goes well, in less than fifteen minutes, a fresh hot pizza is taken out of the oven, boxed and given to the customer. This exchange repeats until closing time, at which the bookkeeper, quite possibly you, records the sales for the day and also knows if a profit was made. Over several days, enough cash is put in the bank to print new specials and menu items on flyers to be handed out to potential customers.
No matter whether it’s a pizza shop, accounting firm, shoe shop, or manufacturing company, there are four functions every business must strengthen: Marketing, Sales, Operations, and Finance. In our earlier example, marketing hands out the flyers to customers; sales, the cashier, takes the order; operations which is the kitchen, makes the pizza; and finance is the bookkeeper who keeps track of the money.
In most cases Marketing generates leads through outbound communication, either digitally or physically. Potential customers are attracted and inquire more information about the company or their product. Over time, if effective, marketing should be able to collect data so that it is able to build and refine the customer profile. Effective marketing systems nurture prospects into qualified leads to hand over to sales.
If marketing is successful, the sales team should have a sufficient quantity of leads to convert into paying orders. This can take anywhere from a few seconds to a few months, depending on the complexity of the product or service. For example, in online sales, the sale team doesn’t interact directly with the customer most of the time and instead offers the customer sales tools such as a website with a shopping cart. On the other hand if the company were bidding on a construction contract, the sales cycle would be long requiring many face to face meetings and exchange of information. In either case, when the customer places the order, the work is handed off to operations.
A good order is like a blueprint for the operations team to properly execute the product or service. As the product or service is built or delivered, there may be more communication between the customer and operations. Once the service or product is rendered, the satisfied customer provides payment which is collected by finance.
Finance manages money. This means managing the short- and long-term requirements including payroll, and inventory, and new equipment, tools, and facilities, respectively. If the business is run successfully, more capital flows in and is retained in the organization, than flows out. This allows the leadership team evaluate and act on greater opportunities to grow the business. As a result, marketing is provided a larger budget to attract more customers, and the cycle repeats.
While the functions appear discrete, they are all inter-dependent. For example, the product or service experience delivered in operations will impact marketing through word of mouth. Similarly, finance needs to allocate capital for the needs of all functions, not just marketing. A leadership team that is able to consistently manage and improve the throughput and flow in each of these functions will eventually succeed in creating a sustainable company built to last.
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