As many things are changing at a fast pace, understanding and managing business processes is key to entrepreneurial success. This post introduces the main three types of processes: production and marketing, resource acquiring and maintenance, and business development. With the guidance provided, you can start thinking more deeply about how to plan and improve your processes.
26.10.2023
Heikki Immonen, Karelia University of Applied Sciences
The three types of business processes
What are the processes an entrepreneur and a small-business owner should be aware of? What processes are worth mapping and analyzing? The answer is that there are three main types of processes:
- Production and marketing
- Resource acquiring and maintenance
- Business development
The first two are about the daily operations of what the business does. Production and marketing are the essence of any business, while resource acquiring and maintenance keep the system up and running.
If everything goes as planned and is definitively going to continue that way, then there would be no need for the third process. However, as no business plan is perfect, entrepreneurs need to have business development processes in place to improve their business operations (the first two types of processes) and their business model.
Let’s look at each of the process types in more detail.
Production and marketing
Production and marketing processes are what you typically analyze. Production is about bringing value to the customer, while marketing is about getting a customer.
Production
For a business making products, the production process describes the process of converting input into outputs. Examples are many:
- A bakery baking cakes from flour, water, sugar, eggs and cream.
- Toyota company assembling cars from components made by subcontractors.
For a business offering a service, the production process is about delivering a service:
- A physiotherapist examines a customer’s physical condition before moving forward with the possible treatment.
- A lawyer discusses with a client and then writes a legal document based on what the client needs.
Sometimes the business includes both elements, as in:
- A restaurant prepares a meal, while also entertaining the customer
- A maker of skis also offers ski lessons for all buyers
You could say that a product is a tool customers use to serve themselves. For example, a hammer (product) is a tool for home improvement (service).
Marketing
Marketing processes are in essence about making a potential customer aware of and interested in the product with a compelling message and then closing the deal. In other words, as a result of the marketing process, the customer is transformed step-by-step from the initial state “is not aware of the product” to the finale state “has bought the product”.
The effectiveness of marketing and sales processes is very important for the overall profitability of the business. If Customer Acquisition Cost (CAC) is too high, you cannot earn a profit.
Examples of marketing and sales processes:
- A bakery advertising in a local newspaper and with street signs inviting customers to visit and make an order.
- A physiotherapist makes fliers and distributes them to a variety of doctor’s offices. A potential customer is invited to make a call or to use the online meeting scheduler.
If you are interested, click to read more about marketing and sales processes here.
Resource acquiring and maintenance
There is the simple truth that you cannot do what you want to do, if you don’t have the resources needed to do what you want to do. In other words
- You can only do what your resources allow you to do.
When you understand this, resource acquiring and maintenance are pretty straightforward responsibilities to plan and handle.
Maintenance
In any business, all resources (like tools and equipment) need to be maintained in order to keep the production and marketing processes up and running. As time passes by, the entropic forces of existence cause inevitable wear and tear. Thus, a business needs to be committed to maintenance. Some examples:
- A sawmill keeping the saw-blades sharp and saw-machines well-oiled
- An app developer paying license fees and updating computers on a regular basis.
- A restaurant cleaning everything thoroughly every day and disposing food stuff that is past its shelf-life.
NOTE: There is the danger and temptation of under-budgeting maintenance. This will end up costing you much more in the long-term and maintenance costs are typically non-linear. This means that if maintenance is done regularly and often, the total cost of maintenance will be smaller than in a situation where you only maintain rarely and when things are already partially broken.
Resource acquiring
Together with maintenance, resource acquiring is equally important. A startup company needs to get a lot of basic tools and equipment needed for their operations. These are typically one-time purchases (non-consumable resources). On the other hand, some resources are used and consumed by the production and/or marketing process (consumable resources), so the need to get more is continuous.
Here are some examples:
- A company hires a new employee (non-consumable resource) and trains the employee to do the required tasks in the production.
- A bakery buys flour and other ingredients once a week (consumable resources)
- A private school pays the electricity bill every month, thus making sure that electricity (consumable resource) is also available in the future.
In summary, if a company neglects the maintenance and resource acquiring processes, the whole business shuts down. If the business doesn’t have the non-consumable resources it needs for its operations, it cannot the start the business. Thus, always ensure first the resources needed to continue doing what you are doing.
Business development (and business meta-development)
Business development, also known as management (process) or adaptation or innovation, covers the processes the company does when the business plan needs to change or the other processes (production, marketing, maintenance) are not going as planned.
Managers need to be vigilant of threats and opportunities. They should see their business through three lenses of business assessment:
- Product-Market Fit: Are there enough customers who want to buy our product? If not, more market research and product development is needed.
- Feasibility: Can we deliver the product and does the product work as planned? If not, more process and product development and better resources are needed.
- Profitability: Can the business bring us the profit and income we want? If not, processes, resources and pricing need to be adjusted in order to reach profitability.
If any one of these assessments indicate that something is wrong, managers need to find out why, and then take action.
Meta-development – improving your development skills
There is one higher-level process to think about, which could be called business meta-development. This is defined as improvement of business development processes. In other words, when a company improves its managers’ skills and its management and product development processes, it is doing meta-development.
- When you are improving your product, you are developing. When you are improving the way you are improving your product, you are meta-developing.
In summary, the solution to uncertainty and changes in the business environment is business development. If your business development strategy doesn’t seem to bring you the positive change you need, you need to improve your approach to business development. You can do this, for example, by applying to the Draft Program®.
About this article
The writing of this article was supported by the INnoVations of REgional Sustainability: European UniversiTy Alliance project. https://www.invest-alliance.eu/ . This project is funded by the Erasmus+ Program.
The content of this article represents the views of the author only and is his sole responsibility. The European Commission and the Agency do not accept any responsibility for use that may be made of the information it contains.
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