BUSINESS & BUSINESS ENTITIES

Business can be defined as any activity that engages an entity. These entities can be called business entities. Business entities can be classified into two types based on the business objective.

 

  1. Profit Organizations – The goal of these organizations is wealth generation.
  2. Non-profit Organizations – The goal of these organizations is service.

 

Business consulting can be practiced successfully only if the business entity is helped to achieve its goal. The goal of business entities is different for different types and so is the approach to business consulting.

PROFIT ORGANIZATIONS

It is important that a business consulting practitioner focuses more on financials and expansion while dealing with profit organizations although there may be other factors that may directly or indirectly influence the business performance. This approach aligns the practitioner’s perspective to the organizational perspective.

Business consulting for profit organizations can be successful only when specific set financial goals like Net profit after tax, regional sales etc. are showing satisfactory results. Sometimes these results are achieved indirectly through planned, phased and careful expansion of the organization. Another approach is metric based strategy which can be formulated based on the business metric being considered like sales strategy, growth strategy etc. The business performance metrics of these organizations are usually tangible and numerical with specific units like Annual turnover of US $ 500 Million.

It is important to note that in any case the focus is more on wealth than value in case of these organizations and goals are essentially short-term.

NON PROFIT ORGANIZATIONS

Non-profit organizations are service oriented and funded to achieve service goals. Service may or may not be tangible. Some examples of tangible service goals are average servicing time, average cycle time etc. Some examples of intangible service goals are goodwill, reputation, overall satisfaction of beneficiaries etc.

The approach to business consulting is more towards processes than financials while dealing with non-profit organizations. The processes form the key to improving services which may or may not directly influence financials. Hence there may not be any significant improvement in the financial results of the organization although there may be a positive feeling in areas where there were glitches and complaints from beneficiaries. Some key areas of business consulting for non-profit organizations are capacity building, economic and social impact etc.

It is interesting to note that some giant profit organizations may pursue non-profit goals for special purposes like brand publicity, corporate social responsibility etc. However, these goals are usually secondary, short-term and seasonal.

It is important to note that in any case the focus is more on value than wealth in case of non-profit organizations and goals are essentially long term.

THE INTERSECTION

Organizations, both profit and non-profit, usually grow in size with time. Once they reach a size larger than what can be called small by common standards, they usually need steady operations and multi-dimensional Non Profit Growth growth and expansion which shifts their focus towards secondary goals. These goals are generally aimed are business excellence rather than wealth or value generation.

During this stage, business consulting practitioners have more or less similar approaches for both profit and non-profit organizations. Medium size organizations usually have steady funds which enable them to focus on other aspects of their business like quality, optimum use of available resources, training and development etc.

It is important to note that in any case the focus is more on basics and excellence than primary goals for both profit and non-profit organizations during the intersection stages and all efforts are channeled towards improvement than achievement.

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