The 3 Most Important Concepts Business Schools Teach

As mentioned in a previous post, you don’t necessarily have to have a business degree to be a successful business owner. You do, however, usually need to have an understanding of certain business concepts to run a profitable business. If you skipped business school and are in the process of starting up your own business, here are a few concepts you should be aware of:

1. Globalization is here to stay

Everything you do in the business world will be affected by global business trends. Even if you open up a brick-and-mortar store, the price of the inventory you order will most likely depend on how much it costs to make the inventory in another part of the world. More and more businesses are outsourcing work to cut costs and selling to the global market. Because of this, business schools teach students that they need to learn to think about global business trends. If you didn’t get your degree in business, you need to be aware of how big of a role the rest of the world will play in determining the success of your startup.

2. Cash flow management is key

Sales matter, but they don’t matter as much as cash flow. You can have record sales numbers and not have enough money to pay your bills on time if you don’t manage your cash flow well. Ultimately, you have to get paid enough from your customers at the right time to be able to pay everything you owe for your office, inventory, etc. Cash flow management is a very important balancing act that business schools spend a lot of time teaching students about. Since you probably don’t have time to go back to business school, you should know that you’ll need to carefully monitor your inventory, orders, payments, and bills to ensure your company’s finances stay on the right track.

3. Your success depends on the profitability of one unit

This is one of the simplest and most essential business concepts, and it’s one you should definitely be aware of before you start your own business. When you’re developing your business plan, you should think about whether or not one unit of what you’ll be selling would be able to make a profit.

If you’re going to be selling smoothies, for instance, you have to consider how much the ingredients to make one smoothie cost, how much it costs to pay an employee to make the smoothie, how much you’ll charge for the smoothie, and whether you’ll be able to make a profit with all these things in mind. If you are able to make a profit, your business, in theory, should be able to make a profit. Business schools stress the importance of the profitability of one unit for a reason, and it’s absolutely critical that you keep this concept in mind as you make business decisions.

If you understand that business is global, sales aren’t everything, and you have to be able to sell at least one unit to succeed, you’ll be just as prepared as all those business grads for the wonderful, crazy, and daunting adventure of owning your own business.

About the Author: Patricia Garza is a freelancer and blogger who primarily writes about education, online college accreditation, business, and technology. When she’s not writing, Patricia likes to spend time with her kids, discuss current events, and paint. Please feel free to leave your comments and questions below. Patricia appreciates your feedback.

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