The Core of a Business - Key Activities & Resources: Crash Course Business Entrepreneurship #8

Summary

This Crash Course Business episode, hosted by Anna Akana, delves into the multifaceted daily tasks of entrepreneurs. It explains that beyond passion and problem-solving, entrepreneurs must juggle various roles including marketing, sales, finance, and HR. The video emphasizes the importance of identifying key activities essential for delivering value to customers and maintaining a competitive edge. It also introduces the concept of key resources, which are crucial for executing these activities. The episode uses examples like SquareSpace to illustrate how businesses align their activities and resources to achieve their value propositions, encouraging viewers to consider their own entrepreneurial tasks and resources.

Takeaways

• 🚀 Entrepreneurs wear many hats, including marketing, sales, finance, and HR.
• 🌟 Entrepreneurship often starts with a passion or a problem that needs solving.
• 📈 Key activities are the tasks essential to maintaining a business's competitive advantage.
• 📋 Key resources are the 'stuff' needed to perform key activities, like physical assets, intellectual property, human resources, and financial backing.
• 📝 Writing down a value proposition helps clarify what customers should choose a business for over competitors.
• 🎯 Prioritizing key activities helps entrepreneurs focus and develop effective strategies.
• 💡 Planning minimizes surprises and boosts confidence in business operations.
• 📑 The Business Model Canvas is a tool for outlining a business's key activities and resources.
• 💼 Examples of key resources include physical assets like warehouses and intellectual property like branding and patents.
• 💰 Financial resources are crucial for funding operations, from purchasing equipment to securing lines of credit.
• 🔍 Analyzing a business's key activities and resources can reveal its operational strategy and competitive advantage.

Q & A

What is the primary role of an entrepreneur?

An entrepreneur's primary role is to oversee and manage all aspects of their business, including marketing, sales, finance, and human resources, even if they started with a specific passion or idea.

What are key activities in the context of a business?

Key activities are the tasks that are absolutely necessary to maintain a business's competitive advantage and keep it running smoothly, such as product creation, marketing, and customer service.

Why are key activities important for a business?

Key activities are important because they directly contribute to delivering the value proposition to customers and maintaining the business's competitive edge.

Can you give an example of a key activity from the script?

An example of a key activity is playing the ukulele for someone who teaches ukulele lessons, as it is essential to their service delivery.

What are key resources, and how do they differ from key activities?

Key resources are the assets required to perform key activities, such as physical, intellectual property, human, and financial resources. They differ from key activities in that they are the means or tools used to carry out the activities.

Why is it crucial for entrepreneurs to identify their key resources?

Identifying key resources is crucial because it helps entrepreneurs prepare for and avoid potential operational issues, such as running out of stock or lacking necessary equipment.

What are some examples of physical resources mentioned in the script?

Examples of physical resources include manufacturing equipment, buildings for employees, warehouses for product storage, vehicles, cash registers, credit card machines, and distribution networks.

How does intellectual property contribute to a business's success?

Intellectual property contributes to a business's success by providing a unique selling proposition and a competitive advantage through patented or copyrighted ideas, designs, and branding.

What role do human resources play in a business?

Human resources play a vital role in a business by providing the specialized skills and knowledge needed to execute key activities effectively.

Why is financial planning important for entrepreneurs?

Financial planning is important for entrepreneurs to ensure they have the necessary funds to cover the costs of key activities and resources, which can lead to business growth and sustainability.

Can you provide an example of how a business like SquareSpace utilizes key activities and resources?

SquareSpace utilizes key activities such as providing website building technology and customizable templates, and key resources like programmers, servers, and marketing efforts to deliver their value proposition.

What is the significance of aligning key activities and resources with a business's value proposition?

Aligning key activities and resources with a business's value proposition ensures that all efforts are directed towards achieving the intended customer value, leading to a more focused and successful business strategy.

Outlines

00:00

🚀 Entrepreneurial Roles and Key Activities

This paragraph delves into the diverse roles entrepreneurs play in their businesses. It starts by questioning the daily tasks of an entrepreneur and contrasts it with traditional business roles like marketing, sales, finance, and HR. The script highlights that entrepreneurs often start with a passion or a problem-solving mindset, leading to business creation. It emphasizes that they must handle a variety of tasks across these domains. The concept of 'key activities' is introduced as the essential tasks required to maintain a business's competitive advantage and deliver value to customers. Examples are provided to illustrate how even niche businesses like pickle-making or landscaping require a broad skill set. The paragraph concludes by encouraging a focus on key activities and resources, suggesting that planning and prioritization can prevent costly mistakes and build confidence.

05:01

🏗️ Identifying Key Resources for Business Success

Paragraph 2 explores the concept of 'key resources,' which are the assets necessary to perform key activities in a business. It begins by posing questions about the resources needed for an online merchandising business, such as platforms, storage, shipping materials, and human labor. The paragraph categorizes key resources into four types: physical resources like equipment and buildings; intellectual property including patents and branding; human resources with specialized skills; and financial resources for funding operations. Examples are given for each category, such as Amazon's reliance on warehouses and Nike's strong brand identity. The importance of aligning key resources with a company's value proposition is stressed, using SquareSpace as a case study to demonstrate how their physical, intellectual property, human, and financial resources support their business model. The paragraph concludes by encouraging businesses to focus on essential activities and resources for success.

Keywords

💡Entrepreneurs

Entrepreneurs are individuals who start and run their own businesses, often taking on financial risks to do so. In the video, entrepreneurs are described as having to juggle a variety of business-related tasks, from marketing to finance, which is crucial for understanding the breadth of responsibilities they face. The script mentions how entrepreneurs often start with a passion or a solution to a problem, which then evolves into a business.

💡Key Activities

Key activities are the essential tasks that a business must perform to maintain its competitive advantage and deliver value to customers. The video emphasizes that entrepreneurs must identify these activities to keep their business running smoothly. Examples from the script include playing the ukulele for a music teacher, designing furniture for IKEA, or writing content for a creative professional.

💡Value Proposition

A value proposition is a promise of value to be delivered to customers and is central to the business model. The video explains that the value proposition outlines why customers should choose a business over competitors. It is directly related to the key activities, as these activities are what the business must do to deliver on this promise.

💡Competitive Advantage

Competitive advantage refers to the attributes that allow a business to outperform its competitors. In the context of the video, it is what sets a business apart and is integral to the value proposition. The script uses IKEA as an example, where their competitive advantage might be their ability to source high-quality, low-cost materials.

💡Key Resources

Key resources are the assets required to carry out key activities effectively. The video breaks down key resources into four categories: physical, intellectual property, human, and financial. These resources are vital for the operation of a business and are directly linked to the key activities that they support.

💡Intellectual Property

Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names, and images used in commerce. The video explains that IP can include branding, proprietary knowledge, and customer databases. Nike's 'swoosh' logo and 'Just Do It' slogan are used as examples of IP that contribute to their competitive advantage.

💡Human Resources

Human resources encompass the people in an organization who bring specialized knowledge and skills to the business. The video uses Laika Studios as an example, where the creation of stop-motion films relies on a team of skilled individuals like sculptors and screenwriters.

💡Financial Resources

Financial resources are the funds required to run a business, including cash, credit, and investments. The video mentions that financial resources are necessary for purchasing equipment, paying for services, and compensating employees. An example given is SquareSpace raising funds to grow their business.

💡Business Model Canvas

The Business Model Canvas is a strategic management tool that helps businesses outline and visualize their business model. The video references this tool when discussing key activities and resources, emphasizing the importance of mapping out these elements for strategic planning and decision-making.

💡Thought Bubble

The 'Thought Bubble' in the video serves as a segment where a specific business, SquareSpace, is analyzed to illustrate how key activities and resources align with their value proposition. It's a teaching tool used to provide a real-world application of the concepts discussed.

💡Pricing Strategy

Although not explicitly mentioned, the concept of pricing strategy is implied when discussing how businesses like IKEA source materials to keep costs low. Pricing strategy is crucial for maintaining a competitive advantage and delivering value to customers.

Highlights

Entrepreneurs often start businesses out of passion or a desire to solve a problem.

As entrepreneurs, we have to handle all aspects of business including marketing, sales, finance, and HR.

Key activities are tasks essential to maintaining a business's competitive advantage.

Key resources are the necessary materials and tools to perform key activities.

Planning minimizes surprises and helps in making better decisions.

Focus on activities that are crucial to delivering your value proposition.

Key activities can include less glamorous tasks like marketing and administrative work.

Ask precise questions to identify your business's key activities.

Physical resources include manufacturing equipment, buildings, warehouses, and distribution networks.

Intellectual property covers patented or copyrighted ideas, branding, and customer databases.

Human resources involve people with specialized knowledge and skill sets.

Financial resources are necessary for funding key activities and resources.

SquareSpace's key activity is providing technology for website creation and hosting.

Aligning key activities and resources with a business's value proposition is crucial for success.

Crash Course Business is sponsored by Google and features graphics by Thought Cafe.

Support Crash Course on Patreon to help keep it free for everyone.

Transcripts

What do entrepreneurs do all day?

I’m not joking.

What are we actually supposed to do all day?

When someone says they’re “studying business” or they “work in business,” they could

mean so many different things.

They could be in marketing, sales, finance or human resources.

So much goes into keeping a company running smoothly.

As entrepreneurs, we probably stumbled into business -- we were passionate about an idea

or saw a problem we wanted to solve that developed into a business.

Or maybe our side hustle got so big it turned into our main hustle.

So here’s a secret: as entrepreneurs, we have to do all those business-y jobs.

Yes marketing, yes sales, yes finance, yes HR.

You may be concocting the perfect blend of spices for artisanal pickles, but you still

have to complete payroll.

You may love being outside planting flowers and sculpting shrubs, but you still have to

market your landscape business.

You may draw a daily webcomic, but you still have to make sure the tech is running smoothly

and your website design is on point.

There’s so much to do!

But to help us prioritize, we need to figure out what tasks we need to do to deliver value

to our customers -- called key activities -- and what stuff we need to get it all done

-- called key resources.

Don’t worry, we’ve got this.

I’m Anna Akana, and this is Crash Course Business: Entrepreneurship.

[Theme Music Plays]

Our idea is the core of our business, but so much more goes into operating a business

day-to-day.

In our value proposition, we wrote down why customers should choose us over the competition

-- our competitive advantage, if you will.

All of the tasks we absolutely need to do to keep our business going and maintain that

competitive advantage are what we call our key activities.

So yeah, if you teach ukulele lessons, playing the ukulele is one of your key activities.

But let’s not forget about all the less sexy stuff that you -- or your staff if you

have one -- are doing every day.

Maybe it’s putting up flyers advertising your fun music curriculum.

Maybe it’s making and posting how-to videos on YouTube.

Maybe it’s offering free trial lessons at the public library.

Or maybe it’s just driving from client to client.

Or biking, scooting, unicycling... you do you.

For IKEA, they need to design new 1000-piece puzzles -- I mean… furniture -- that people

will want in their homes.

But they also need to source materials that are high quality but low cost to keep prices

down,

keep their stores stocked, manage any shipments, maintain their website, and update social

media to show off those meatballs and communicate with customers.

When we’re just getting started, figuring out what’s essential to our business keeps

us focused, helps us develop strategies to make better decisions down the road, and potentially

saves us a lot of time and money fixing a big mistake.

Planning minimizes surprises.

And I don’t mean a “found 20 bucks in your pants pocket” surprise, but “the

website went down and customers can’t make orders” surprise.

Not to mention, I just feel wayyy more confident when I’m well prepared.

So what do I really do all day?

For me, one of my key activities is writing.

YouTube videos, TV pilots, songs, books -- I do a lot of writing!

But when I put that down on my business plan outline, like the Business Model Canvas in

the Key Activities section, I’m not going to spell out exactly how long I’m going

to write each day or get into specific word counts.

Think big picture to start and keep it simple.

You don’t need every logistical piece entirely mapped out!

And remember, we’re focusing on the activities that are absolutely crucial to delivering

our value proposition.

If I listed out every single thing I do in a day, we’d be here for a while.

So I’m not going to put down “feed cats,” even though they might be hungry, because

that’s not directly helping me deliver value to my audience.

Or is it?

To really make sure we’ve covered our bases when making a list of key activities, we can

ask some precise questions.

One, if you have a product, what are the necessary steps to produce it?

Two, if you have a service, what are you offering customers and what do you have to do in order

to provide it?

Three, how are you sharing updates and information with customers, or how are they getting your

offering?

Four, what’s most important to creating revenue?

-- Do you sell products in stores?

Source materials to make your products?

Create bundles of services to sell?

And finally, what activities do you find yourself doing every day?

So we do amazing things that provide value for our customers, but all that doing usually

relies on having stuff.

In business speak, the stuff we need to accomplish our key activities are known as our key resources.

If we don’t outline our key resources, we might get caught unprepared or not be able

to perform one of our key activities.

Knowing /what/ is just as important as knowing how!

If you’re selling merch online, what online store system are you going to use?

Amazon?

Shopify?

Instagram?

Etsy?

Will you need software to record the sales so you’re ready for tax season?

Will you need storage for the merch in your basement?

Will you need shipping materials to send packages?

Will you need employees to help you operate all of this?

There’s a lot to consider, so let’s break key resources up into four loose categories.

***First, there are physical resources for business activities like manufacturing equipment,

buildings for employees, warehouses to make and store products, vehicles, cash registers

or credit card machines, and distribution networks.

For example, Amazon relies heavily on their warehouses -- both for data storage and product

storage.

They also need all the equipment to create their original products, the buildings that

their employees work in, as well as the locations of the 11 physical Amazon Go stores that exist

as of 2019.

***Next, Intellectual Property covers various ideas that can be patented or copyrighted,

which includes specific branding, proprietary knowledge, partnerships, and customer databases.

IP resources are tough to develop because it takes creativity to come up with a completely

unique idea or design.

But then you have something no one else has, or they have to pay you to use it -- and if

they don’t, it could be illegal and it’s definitely unethical.

So… don’t steal!

Intellectual Property is an incredible competitive advantage that helps us stand out.

When I say the word Nike, what springs to mind?

[I’m just guessing, but probably not the Greek goddess of victory...]

The “swoosh” and “Just Do It” are everywhere in the athletic world.

Nike relies heavily on their brand, plus patented technologies for things like textiles and

shoes, to draw in customers.

***Now, both of these kinds of resources don’t magically create or operate themselves.

[This isn’t Fantasia.

There aren’t any magic brooms.]

Often we have tasks that only some people can handle because they involve specialized

knowledge.

These human resources -- or people with specific skill sets -- pop-up all over different industries.

More people probably know how to swing a hammer than weld.

Laika Studios creates stop-motion films like Coraline or the Corpse Bride, which are notoriously

time-intensive and have thousands of moving parts.

The handmade puppets and character designs depend on a bunch of humans: painters, sculptors,

screenwriters, film editors and more to tell these stories.

***And, lastly, key activities and resources aren’t free, and might not even be cheap.

So we need financial resources.

***For example, an aspiring photographer might save up cash to purchase high-quality equipment

and launch their independent photography business.

***A local retail company may opt for a line of credit in order to manage the ebb and flow

of their patrons.

***And a tech startup might tempt talented programmers into working for them by offering

them stock options as part of their contract, kind of like a financial bonus.

We can think about any business and do some detective work to guess how they might put

all these key activities and resources together.

So let’s go to the Thought Bubble and take a look at one example.

Maybe you’ve heard of SquareSpace, the website building and hosting company.

So… besides what you’ve heard in ad reads... what do they do exactly as a business?

From the About section of the SquareSpace website, we can find their value proposition:

Basically, their main key activity is providing the technology to help people make and host

websites.

And part of their competitive advantage is that they offer customizable themes and templates

that hopefully help people make websites that look good.

They also provide digital storage and backups for all their sites, and they use marketing

and advertising -- like paying YouTubers -- to tell potential customers about their services.

Now to accomplish these key activities, they need key resources.

Physically, they need buildings for their employees and servers for data storage and

website hosting.

And part of their intellectual property is all the website templates that they provide

users.

Human-wise they need programmers, graphic designers, marketers, customer service reps,

and people forging key partnerships [like with exciting personalities like, ahem, me].

And all of this requires money or financial resources.

SquareSpace raised private cash to get started and then got more funding from investors to

grow rapidly in the easy-to-use web design market.

All these key activities and resources align with their value proposition.

So any business, including our own, should take a similar approach and make sure to stay

focused on what’s essential!

Thanks, Thought Bubble!

Focused businesses, where all key activities and resources go into achieving the value

proposition, have clearer pathways to success.

Ultimately the bottom line is: What do you do, and what do you need to do it?

Next time, we’ll continue diving into the Business Model Canvas sections by identifying

all the people and businesses /outside/ your company that can help you thrive.

Thanks for watching Crash Course Business which is sponsored by Google.

And thanks to Thought Cafe for the beautiful graphics.

If you want to help keep Crash Course free for everybody, forever, you can join our community

on Patreon.

And if you want to learn more about how to organize your schedule so you can get your

key activities done, check out the Crash Course Business: Soft Skills episode about time management: