It is a known fact that there are more failed businesses than those that go on to succeed. According to research by the United States Bureau of Labor Statistics (BLS), only twenty-five percent of businesses make it to fifteen or more years. This unfortunate fact has shaped the outlook of many industries. Business establishments crashing out all the time shows that business is not for those who are faint at heart. Entrepreneurship is quoted with a lot of risk and failure. Perhaps we should take a deeper dive into what a business is.
When people think business, the first thing that comes to their mind is making money. There is nothing wrong with the thought. But there is more to business than money-making. Maybe a lack of this in-depth knowledge of the business is why some businesses do not succeed. To begin with, the term business means the organized efforts and activities of individuals. Another definition refers to a business as an organization or enterprising entity. This implies that a setup is primary to have a business.
The setup of a business is different from that of a startup. The first difference to note is that startups are built to grow fast. Startups have a product/service that can entice a large market. But businesses are not built like that. You do not need a big market to run a business effectively. The difference between these two ventures alone sets the tone for business success because this will influence how you plan, source capital, and even roll out your product or service.
Below are 14 tips on why businesses succeed. These tips will also help you recreate your business success.
1. Good leadership and Management
Business is mostly about leadership and Management. These two roles may be intertwined, but they are different. As a leader, you bear the vision for the business. Alongside communicating the company’s goals, you have to communicate the team’s worth and potential to them. In other words, you have to keep them inspired. And often time leadership must come first.
While leadership is asking questions of “what to accomplish?” Management is asking the question of “how to accomplish?” Stephen R. Covey used a description in his book 7 Habits of Highly Effective Leaders. He illustrated that “Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.” Management is about how to accomplish certain things.
Instead of just doing different things in your business establishment, your business must be governed in both what to do and how to do it. With these two systems in place, your business success stands a better chance than ever. But many owners are hooked on managing and have neglected leadership. As the business owner, if you cannot lead and manage simultaneously, you can bring in an experienced CEO to relieve you of the management task.
2. Appropriate Goals
Goals are the highest forms of motivation. And that is what differentiates a leader from a staff or resource manager. Imagine a football match or a track game where there is no goal post or finish line, respectively. There won’t be clear-cut determinants about how to define success in these sports. The same goes for your business. Without an idea of the future, there is no business success for you to attain.
A widespread mistake business makes when there is no goal is that they make another company their target. By doing so, the importance of goals is still not captured because only a summary of the goal can be captured from outsiders. Also, the resources of the other company may be different from yours. To create a goal, you have to divide the goal into every simple day-to-day step that will help you achieve the goal.
Apart from the fact that a roadmap that you and your team can follow to the goal must be well highlighted, this goal’s details must include your core values, mission, and vision for business success. Above all, you have to be true to yourself. You should consider the market and the resources you have before setting targets. This way, you will be revving yourself and the business up for success.
3. Attending to Customer Needs
To attain business success, you must make customer care your priority. You do not want your business to be the last resort. If so, you have to entice them so that you are their first choice and they always want to come to you. Even after the first time, you need to keep your customers coming back. Businesses usually offer customer incentives so that they can entice their customers. These incentives can be in the form of a bonus, discount, cash, additional samples of your product, and so on.
There is no better way to do this than through top-notch customer services. This includes the attention you give to your customers before, during, and after using your service or purchasing your product. One technique of sales that is often neglected is cross-selling. Conventional upselling seems to be the more preferred sales technique.
Upselling is encouraging your customers to buy a more expensive product because of its upgrade or add-ons. This way, customers can access an option of your service or product they were not aware of before. Cross-selling is a sales practice that encourages customers to buy a complementary product or service. Cross-selling is responded to only by 0.5% of customers. On the other hand, more than 4% of customers respond to upsell.
4. Adequate Capital and Funding
How you obtain money for your business is crucial to your business success. Before sourcing for capital or funding, you should estimate how much it is you want. Alongside the amount measure, you must also know what you need the fund for. Is it for a long-term investment such as real estate? Or is it a fund that you need within the next few days?
To answer these questions correctly, consider your business very well. What does your credit score look like? And what does your cash flow represent? Each of these details will get you prepared for whatever financial source you want to explore. Usually, you can source for capital in either of two ways. You can finance your business through a loan or by offering some percentage of your company equity.
5. Maximizing Profit
Every business is aware that funds are needed daily to keep the company afloat. But many of the business owners and CEOs do not know how much revenue is generated. And once there is an interruption to cash flow, continuity may become highly problematic or out rightly impossible.
Business success is not limited to the capital you get. Sometimes, it is how you use the capital that matters. But business success is not just a one-step action. The steps must be reiterated repeatedly. Hence, after your capital has yielded interest or profit, you need to maximize the profit.
Profit maximization is the process of finding out the price, input, and output conditions that lead to the highest profit. This way, your business can keep the total cost (TC) of production or render services below the total revenue (TR) you generate. That is how you can tick the box on financial attainment in your business success.
6. Recognizing Opportunities to Scale
To attain business success, your business must always have eyes for an opportunity to scale up. You cannot afford to plateau or stay rigid. Business establishments that have managed to succeed are those who have overcome complacency. Some other times, because of few business successes, businesses begin to get complacent. According to Lennox Claudius Lewis CM CBE, “Sometimes success needs interruption to regain focus and shake off complacency.”
Regain focus here would mean your business has to look for points where it can exert remarkable growth. You must understand that the need you are fulfilling to your customers may not always be there. Hence, you have to pick up new trends because even thriving industries can change. Now, you have to be careful not to expand too fast. In fact, it is best to treat the expansion process as though you were just starting the business. Go back to your plan and devise means to achieve your goal.
7. Riding on the Waves of Macroeconomic Factors
Business success is a product of the survival of macroeconomic factors. These factors include inflation, level of unemployment, national income, and GDP. These factors are very complicated, yet they affect the whole economy. But you can use these factors to your advantage. You can analyze these factors with economic indicators. Indices, earning reports, and financial summaries are the common indicators you can use to analyze macroeconomic factors. When you have a good analysis of the macroeconomic factors, you can make more accurate business success decisions that will not be affected by the economy. This means that you can still achieve business success in a bad and challenging economy.
8. Thoughtful Succession Plan
Key players leave the business all the time. Some key players may even pass away. To secure the establishment’s business success, if either of these happens, a thoughtful succession plan must be put in place. It is best for business success to have the right people in place to take over most senior roles in the organization. Succession plan makes transition go smoothly and quickly when something happens. With a thoughtful succession plan in place, you will be cutting the cost of recruitment.
To bring the succession plan in tandem with business success, you have to be proactive with choosing senior positions and candidates. These candidates will both be tested and trained for the intended positions. Usually, the HR department is tasked with succession plans. But these tasks can also be contracted out to staffing companies. In some cases, an interim candidate can be employed and trained for a position. This way, the business maintains balance and keeps gunning for business success.
9. Advisory Board or Group
Having like-minded people around is a significant booster for business success. As JC Penney taught, “Every great business is built on friendship.” Now, advice about your business success has to come from more than just like-minded accomplices. Business success is built by clients and experts of your advisory board. With an advisory board, you now have access to a thoughtful and strategic third-party perspective on how to achieve business success.
10. Learning from Failure
Business is rigged with a lot of setbacks and stumping blocks. And there is no such story about business success that does not have near-death/end scenes. What kept the heroes of these stories going was their determination to attain success. For instance, Thomas Edison tried for as much as 10,000 times before he got a breakthrough. Then he said, “I have not failed, I have just found 9,999 ways that won’t work.”
In 2008, Elon Musk was faced with a dilemma for the survival of his companies. With the two options he had, he might be sacrificing one company or even the two. It was a near-death experience for him, costing him 100 hours of work per week. But he learned from that phase in his company. And so should you. Many businesses quit too soon. They give up on their goals and customers, sometimes because of a bad quarter.
You cannot afford to give in to your failures. You should learn from them and go on with creating your own success story. As Nelson Mandela taught about himself, “I never lose. I either win or learn.” Therefore, when things do not go as planned, try one more time.
11. Believing Team or Employee
Another key to business is having a team of believers. Having men and women who believe in the business establishment’s values, vision, and mission is priceless. And to make hiring a team member worthwhile, make sure to hire with these criteria; integrity, passion, enthusiasm, and experience. However, all these characters might not be readily available to candidates. Hence you have to pick teachable candidates.
When these candidates are on the team, human Management must also be well addressed. Good human Management or HR structure will your business maximize employee performance. This is generally referred to as the post-hiring phase of human Management. Now, you may also want to reward them with compensation and bonuses depending on their performance in your organization. All these human resource operations contribute immensely to business success.
12. Take Advance Payment
Getting an advance for services and products is a smart business tip that instigates success. Having your clients pay for goods before receiving them protects you against nonpayment. Advance payments also cover your out-of-pocket cost for delivering your product or service. Clients can be asked to pay in full or make a deposit and then complete the payment on delivery. The common method for taking payment is the payment on delivery method, referred to as deferred payment.
This method of payment can also be used to ensure your supplier delivers. This way, your producer/supplier can use part of your deposit to supply more products when making a large order. To ensure this agreement between your business and customer, or supplier, and sometimes government is secured, an advance payment guarantee can be issued. This bond is used to specify that the advance payment must be refunded if the issuer in the agreement defaults.
13. Avoid Offering Credits to Customers
Business success is often hampered by little financing. That is why successful businesses do not offer credits. Too much credit can cripple your business. Keeping track of accounting records can become tough and complicated. Also, there is a higher tendency that you and the credited customer will enter a dispute or even a conflict because credits come with more charges than usual. Resolving this dispute alone may cost your business a lot of time, money, and effort.
The major hindrance to your business success because of credit policies are defaulters. While the interest on their credit may seem to be growing every month they default, some of them do not bother to make good on their promises. Hence, your business must avoid offering credits to customers when seeking its business success.
14. Avoid Copying Other Businesses
At the center of every successful business establishment is their originality. The truth is that you and your team are all that is needed for you to create the much-desired business success. You have all the ideas and creativity necessary to satisfy your customers and reach your goal. By practicing originality, you will be able to build your business success with true interest. Even you can become a pacesetter in your industry by introducing a groundbreaking method of production and marketing.
“Motivation will almost always beat mere talent.” – Norman Ralph Augustine, a United States aerospace businessman. Beyond the skill and talent that may be rampant in your industry, your passion can outweigh them all. If you perceive your business to be significant enough, you have to give it everything and see that it works. Hence, you can create a successful business through much passion and commitment. Once your business brings you fulfillment and excitement, you can be sure you have a passion for it. And it is with that passion that you will slide down the lows and scale the heights to reach your business success.
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