In 2021, there were more than 32.5 million small businesses in the US. Despite economic challenges, the number of small businesses continues to grow each year.
Yet, that doesn’t mean all businesses thrive or even survive. In fact, nearly half of companies fail in their first five years. One primary reason they fail is related to business plan problems.
Thus, knowing the difference between a core function and a non-core function is essential for business owners. This understanding allows you to build a functional strategy and operational business model.
So keep reading as we explore these types of business functions.
What Is a Core Function?
A core function is the main activity of the company. It’s a business’s revenue-generating activity or activities.
The core business function often refers to producing goods or providing services.
Many small businesses divide their business functions into four categories. They are:
- Human resources
The operations department encompasses the core business function. Larger companies may have more departments. But, the operations department remains the core function.
Businesses cannot achieve their mission without identifying the core function because they don’t know what they’re providing customers. With a clear core function, building effective business strategies are possible.
Businesses can create budgets and allocate budgeted dollars accordingly.
The core function also provides information to the company. Businesses can see how they compare to competitors and work to improve their practices.
Let’s look at an example. Symarco Payroll Services offers business software for payroll, financial reporting, and taxes. Its core function is offering accounting assistance or services and selling this accounting software. You can visit www.payrollserviceaustralia.com.au to learn more about their core business offerings.
What Are Supporting Functions?
Supporting business functions support the core functions in operation. They don’t generate revenue.
As mentioned, non-core functions can include marketing, human resources, and finance. They can also include the following functions:
- Corporate strategy
- Customer service
- Information technology (IT)
- Quality management
Looking at our example from before, let’s not confuse Symarco Payroll Services’ core function with its supporting functions. Since this is a financial services company, its core function relates to selling financial software.
But the company still has to handle its sales, marketing, customer relations, etc., to achieve success. These non-revenue generating activities support the primary function of selling financial services.
Therefore, the non-core functions are also vital to the business. Companies should effectively identify and manage each department to ensure smooth operations.
Of course, not all companies have this many departments. For instance, since Symarco Payroll Services is a small business, it most likely doesn’t have a corporate strategy.
Identify Your Core Business Functions
It doesn’t matter if you have one employee or hundreds; every business owner needs to identify their core function to run a successful company.
Your core function will drive your business plan if you’re just starting. So don’t skip this crucial step.
To learn more about all things business, check out the rest of the blog. We post new content in the Business section regularly for our readers.