Business driver – definition and meaning

A Business Driver is a component, condition, process, resource, or rationale that is vital for a business to thrive. In other words, it is something that has a major impact on a business’ performance.

It may also be a situation that would improve a company’s financial health. For example, a shoe shop manager may aim to reduce the percentage of ‘no buys.‘ ‘No buys’ are people who walk in and buy nothing. The manager’s aim would be a business driver to improve sales.

Businesses should identify their business drivers. Additionally, companies should try to maximize any that are under their control.

A company’s strategy and goals are dependent on the business drivers it identifies, and their order of importance.

Not every business driver is good

We must accept some drivers as necessary evils because we cannot control them. Examples include trade relations with other countries, the price of raw materials, geopolitical unrest, and economic conditions.

Identifying a company’s business drivers gets harder as it becomes more complex. There are computer programs that help firms clarify and track their business drivers.

The term ‘business driver’ has become a fashionable catchphrase that refers to any key part of a business.

The business drivers of software companies, for example, are technological innovation, better products, and optimum marketing.  First class customer support is also a key business driver.

The most common business drivers are:

  • Legislation and government policy
  • Litigation
  • The price of resources or commodities
  • Competitors’ activities
  • Customer demand
Business Driver in the oil and gas industry
The image shows the top 10 business drivers for the oil & gas industry for 2015. (See video below)

Internal and external business driver

  • Internal

Examples of internal drivers are the staff and different departments within a business. Especially those that contribute to product sales, marketing, production, and development.

The sales personnel, for example, boost demand for a product. They also work to make sure the company’s goods reach their customers on time.

A business’ internal drivers support its work. The internal drivers also have a common goal, such as aiming for a percentage market share. Market share refers to a company’s sales relative to the size of the whole industry.

  • External

Examples of external drivers include customers, the economy, competitors, and regulatory agencies.

Drivers that influence performance include those that help generate sales. Examples include how many calls people make, the company’s follow-up service campaign. How many visitors come to the company’s website is also a business driver.

Key drivers are not the same in all industries. In a law firm, for example, thoroughness is much more important than speed of delivery. For a pizza delivery service, however, speed is king.

Innovation in product development and service delivery often emerges as a pivotal business driver, propelling companies to the forefront of their respective industries.

The Corporate Finance Institute has the following definition of “business driver”:

“Business drivers are the key inputs and activities that drive the operational and financial results of a business. Common examples of business drivers are salespeople, number of stores, website traffic, number and price of products sold, units of production, etc.”

Adaptability to changing market conditions is also a critical business driver, ensuring a company’s resilience and long-term success.

“Business driver” – vocabulary & examples sentences

There are many compound nouns related to the concept of “business drivers.” An example is “business drivers analysis.” A compound noun is a term comprising two or more words. Let’s take a look at seven of them, learn their meanings, and see how we can use them in a sentence:

  • Business Drivers Analysis

A detailed examination of the elements that significantly impact a company’s performance.
Example: “The management team conducted a thorough business drivers analysis to understand the factors influencing their sales trends.”

  • Business Drivers Identification

The process of pinpointing the specific factors that are crucial for a company’s success.
Example: “Business drivers identification is the first step in our strategic planning process.”

  • Business Drivers Management

The ongoing process of overseeing and optimizing the key factors that drive business growth.
Example: “Effective business drivers management has enabled us to stay competitive during economic fluctuations.”

  • Business Drivers Mapping

The process of linking business drivers to company processes to visualize their impact.
Example: “Our consultants specialize in business drivers mapping to help clients allocate resources more efficiently.”

  • Business Drivers Monitoring

The continuous tracking of the key indicators that influence business outcomes.
Example: “Regular business drivers monitoring alerted us to a decline in customer engagement early on.”

  • Business Drivers Optimization

The act of adjusting business drivers to achieve improved performance and efficiency.
Example: “Through business drivers optimization, the company was able to significantly reduce overhead costs.”

  • Business Drivers Strategy

A plan of action based on key business drivers to guide a company toward its objectives.
Example: “Developing a robust business drivers strategy has been pivotal to our market expansion efforts.”

Video – What is a Business Driver?

In this visual guide presented by our affiliate channel, Marketing Business Network on YouTube, we explain what a “Business Driver” is using straightforward language and easy-to-understand examples.