Every organisation exists to do something for someone. A bakery-café exists to feed people well; a hospital trust exists to treat patients; a charity exists to serve its cause. That is its purpose: the reason it is worth having at all. Marketing starts here, because you cannot promote an organisation well until you can say, in one sentence, what it is for.

Organisations come in three broad kinds. Private-sector businesses are owned by individuals or investors. In the UK the most common forms are the sole trader (one person who owns the business and is personally responsible for its debts), the partnership, and the limited company, which is legally separate from its owners. Public-sector organisations, such as councils, state schools and the NHS, are funded mainly by government. Not-for-profit organisations, such as charities and community interest companies (CICs), put all or most of any surplus back into their purpose rather than paying it out to owners: a charity pays nothing to owners, and a CIC can pay its owners only a limited dividend.

Where does profit fit? For a private business, profit is both a result and a constraint. It is a result because it shows that customers value what the business does enough to pay more than it costs to make. It is a constraint because a business that makes no profit for long enough cannot pay its staff, replace its ovens or survive a bad winter. Few owners would say profit is their only goal, but none can ignore it. Even a charity needs more money coming in than going out.

An organisation also answers to more people than its owners. Freeman (1984), whose book did much to popularise the idea, defined a stakeholder broadly: in our words, any group or person who can affect, or is affected by, what the organisation sets out to achieve. Customers, staff, owners, suppliers, lenders and the local community are the usual groups. Their wants overlap, but they also pull against each other. Staff want fair pay and steady hours; customers want good value; owners want a return on what they have put in. Much of management, and a good deal of marketing, is balancing those wants openly rather than pretending they never conflict.

For a marketer, the stakeholder list is a practical tool. It tells you who will notice a new campaign, who has to deliver it, and who could be let down by it.

A business model describes how an organisation creates value for customers, delivers it to them, and captures some of that value as revenue. Two cafés on the same street can sell similar coffee with quite different business models: one may make its money from people lingering over lunch, the other from commuters grabbing a takeaway on the way to work.

The most widely used way to set out a business model on one page is the Business Model Canvas, from Osterwalder and Pigneur's book Business Model Generation (2010). It has nine building blocks, which fall into three groups.

Who the business serves, and with what: (1) customer segments, the groups of people or organisations it serves; and (2) value propositions, what each segment gets and why it would choose this business over the alternatives.

How it reaches them and earns from them: (3) channels, how it reaches customers and delivers to them; (4) customer relationships, the kind of relationship it builds and keeps with each segment; and (5) revenue streams, how, and how much, each segment pays.

What it takes to run: (6) key resources, the assets the model depends on, such as premises, equipment, skills and brand; (7) key activities, the things the business must do well; (8) key partnerships, the suppliers and partners it relies on; and (9) cost structure, the main costs of running the model.

The value proposition is the heart of the canvas, and the place to be most careful with words. "Great coffee" is not a value proposition; nearly every café claims it. A useful one names the customer and the benefit in plain words, for example "a proper breakfast, baked on site, ready in five minutes for people on their way to work". If you cannot write it in one plain sentence, you probably do not yet know why customers choose the business.

Many businesses serve more than one segment, and each needs its own value proposition, channels and revenue stream. The blocks also depend on each other. There is no revenue stream without a segment paying for a value proposition, and every key activity shows up somewhere in the cost structure. So when one block changes, look at the others. A new customer group may need a new channel, new skills and new costs.

In this module you use the canvas to describe a business as it is today. Redesigning a business model is a separate skill, which more advanced courses build on.

Whatever its size, every business has to do the same broad kinds of work. These are its functions:

Operations makes and delivers the product or service. Finance keeps the books, pays the bills, plans the budget and reports the results. People, or human resources (HR), recruits, trains, pays and looks after staff. Sales wins and manages customers, especially business customers. Marketing works out what customers want and how to reach them, and shapes what the organisation offers, says and charges. Technology runs the systems everything else depends on, from the tills to the website.

A function is not the same as a department. In a large firm each function is usually a department with its own head, and the organisation chart shows reporting lines: who answers to whom. In a small firm one person often covers several functions, and some work is bought in from outside. A café owner may do the hiring, the supplier orders and the Instagram posts in the same afternoon, and send the accounts to an external accountant. The functions are all still there; they just don't have their own offices.

Where does marketing sit? In some organisations it is a large department reporting to a marketing director on the board. In others it is one person, sometimes part-time, reporting to the owner. In either case marketing depends on every other function, and every other function feels what marketing does.

The relationship runs both ways. Marketing needs things from each function: operations to make and deliver what is promised; finance for budgets and figures; HR to brief and train the staff who meet customers; technology for data and systems. Marketing gives things back: forecasts so operations can plan, customer insight so the business makes what people want, and a clear brand so staff know what they stand for. A promotion that the kitchen cannot make, the tills cannot process or the counter staff have never heard of is a marketing failure, however good the poster.

For a new marketer, mapping these relationships early is time well spent. It tells you whose help you need before a campaign begins, and whose day your campaign will change.

A profit and loss account (P&L, also called an income statement) shows what a business earned and spent over a period, usually its financial year. It reads from top to bottom, taking costs off as it goes. Here is a simple one for a hypothetical florist, invented for this lesson:

Revenue £200,000. This is everything customers paid for what was sold, before any costs; it is also called turnover or sales.

Cost of sales £80,000. These are the direct costs of what was sold: for the florist, the flowers, ribbon and wrapping. Sell more bouquets and this cost rises.

Gross profit £120,000, which is revenue minus cost of sales. As a percentage of revenue (£120,000 ÷ £200,000) this is the gross margin: 60%. In plain words, 60 pence of every pound a customer spends is left after paying for what they bought.

Overheads £100,000. These are the running costs of the business, such as staff, rent, energy, insurance, accounting and marketing. Most do not change much from one week to the next, however many bouquets are sold.

Operating profit £20,000, which is gross profit minus overheads. As a percentage of revenue this is the operating margin: 10%. Interest and tax come after this line, but operating profit is the clearest measure of whether the day-to-day business pays its way.

Three habits help when you read real accounts. First, read the margins as well as the pounds, because percentages let you compare one year or one business with another. Second, look at which costs are largest; they are where a small change matters most. Third, remember that revenue is not profit. A business can sell a great deal and keep very little.

Nor is profit the same as cash. A business can be profitable and still run short of money in the bank. Business customers often pay weeks after they receive the goods; stock and equipment are paid for before they earn anything; loans have to be repaid whatever the P&L says. Growing businesses feel this most, because they spend on growth before the extra sales arrive.

For marketers, the P&L is the scoreboard. A campaign that raises revenue but squeezes the gross margin can leave the business worse off.