All small businesses, whatever the size, need to set up multiple departments to operate successfully. Depending on the nature of your product or service, you may need to outsource these areas or hire them internally. Having a clear picture of your small business needs takes planning, but you can start with an evaluation.
What is a business resource?
To put it simply, a business resource is an organization’s inputs’ or ‘assets’ that are used to produce an outcome, whether it’s a product or service. Assets can either be tangible or intangible. Tangible assets include finances, human assets, equipment, real estate, tools, and machinery. In addition, intangible assets include technology, patents, partnerships, databases, software, skills, culture, and expertise.
The four main types of resources are:
- Financial Resources
- Material Resources
- Human Resources
- Intellectual Resources
What are the four main types of resources to evaluate?
1. Financial Resources
Financial assets are used by businesses to buy raw materials and pay salaries. Additionally, financial resources are the funding a company uses to spend. Types of funding include cash and bank assets, venture capital, shares, checks, promissory notes, and checks that can be converted into cash.
Effective financial resource management is critical to achieving a business’ target objectives. In case of a shortage of financial business resources, operations of the business are halted.
Sources of financial assets include:
- Equity shares or share capital
- Preference shares
- Trade credit
- Debenture
- Retained earnings
- Working capital loans
- Bill discounting
- Venture funding
- Factoring services
- Lease finance
2. Material Resources
Material business resources are physical or tangible assets that are used to produce an output or improve performance. Additionally, material assets are constantly subject to change and innovation as technology progresses.
Important material assets include:
- Raw materials
- Machinery
- Technological tools and equipment
- Real estate
- Furniture and supplies
- Manufactured product
3. Human Resources
Employees and their skills are critical assets to an organization. Regardless of company size, humans are the foundation of a successful business. Because of this, human resource management is considered one of the most important sectors.
Business human resources are responsible for recruiting, screening, and training job applicants to help the organization achieve its goals. Human resource management also deals with company culture, knowledge, skills, and expertise.
Aside from maximizing employee productivity through training and development, the HR department is critical for employee well-being by administering employee benefits and compensation.
4. Intellectual Resources
Intellectual resources are intangible assets. This means that no one can see or touch them. Unlike material resources, intellectual resources appreciate with use. Development of it comes through learning and coaching. Intangible assets include copyrights, partnerships, patents, brands, and intellectual properties. In addition, these include customer knowledge, product reputation, customer service reputation, and brand reputation. Intellectual property also includes technologies that make business operations easier and more streamlined. These include software and customer databases.