Hello again. This here is a typical “fill in the blanks” write-up. I like thinking about starting companies, haven’t as yet engaged on starting one, though I feel relatively confident that I understand what it takes, but also that there are several ingredients that I still lack.

Following is a diagram of all the components of a company, that I could think of, without opening a book or consulting other people. That is where you come in. If I made vital errors in my logic, I would appreciate being corrected, no matter how harsh your criticism may be.

Ultimately, I see companies as coming out of a number of basic building blocks. An important one is the idea, and in order to bring that idea from production to market, you need an excellent multidisciplinary team (which includes partners), sufficient cash, and the right legal structure, the latter serving as both protection for an idea and for its stakeholders. I call them basic, they are in fact essential, and the hardest to achieve of all.

Decisions on the production side include where to locate your “plant,” the production-facilities needed to produce your product as cost-efficiently as possible. You need to decide on materials, which in the case of IT is hard- and software, needed to produce your product. And design also plays an important part in the way customers perceive your product. All of which feeds back to the basic building blocks that ensure that these things are executed well, funded, and protected legally.

Logistics is a function that I usually consider as (partially) outsourced, because it is both a relatively expensive process and there are plenty of efficient global operators that can take over most of that task. As production increases it may be logical to take over that function yourself, though it’s still better to hire a ship than to buy it, I think. And of course, economies on the internet are entirely different, though things like hosting are again more logical to be outsourced most of the time.

Decisions on the sales & marketing side include whether to target businesses (B2B) or individuals (B2C) and whether to operate nationally or internationally. This is a pretty complex decision-process, which comes with a number of trade-offs. If you target too large a market, your production may not be able to handle it. If you’re a B2C company, growing international may require working with local partners (B2B), and the same applies to national-to-international B2B-strategies. And you need to position yourself well enough to reach the right customers and protect against competitors & new entrants. Again, commercial strategies require the right team skill-set, sufficient funding, and legal structure that protects your business, nationally & internationally.

So, while I realise I’ve been speaking in generalities all this time, it’s nice to hear where my logic falters, or where I see things too simplistically or complex. Please let me know in the comments.

Time and inspiration permitting, I may write a number of more focussed posts in the future, asking about strategies towards attracting the right basic building blocks (ideas, people & money mainly), as well as regarding the production and sales & marketing functions.

Vincent van Wylick is a co-author on Tech IT Easy. Rumours of his demise have been far exaggerated (by himself mainly).