When an entrepreneur opens a business, it takes a great deal of work to make that business a success. An experienced business professional will tell you that business success is planned and does not happen by accident. But before reviewing each of these factors, I’d like to share with you what the definition of business success is for me.
Definition of Business Success
The financial rewards that come from being successful in business are, of course, important to many entrepreneurs, and are key factors in motivating them to work hard and take tremendous risks.
But if success can be defined as the sense of satisfaction and fulfillment you have when you finish your business career, success has other dimensions that for many business owners are just as important, if not more so, than monetary rewards.
For entrepreneurs, great satisfaction comes from the process of creation, starting with just one idea and building something that lasts.
Seeing your family name in the company is a source of pride for you. Successfully facing challenges and, as a result, finding skills and strengths you didn’t think you had, these are definitely aspects of personal success in business.
Successful companies get a substantial return on investment for shareholders who risked their capital in the company.
The founders of the company, who are generally also shareholders, can create wealth for their families and security for their future, as well as enjoy a more prosperous lifestyle. They measure success by giving their children a better life than when they were young.
Companies also measure success by the good they do for society. Some have specific social objectives, such as improving the environment or providing educational opportunities for children through the products and services they offer.
Others have a very high commitment to charitable giving and to being good corporate citizens.
With the number of businesses that fail or start strong only to stumble in the competitive market a few years later, another measure of business success is the ability to maintain success in the ever-changing turbulent business world.
Helping customers solve a problem: that’s why many of the products and services we use every day were created.
For business owners, seeing their products make their customers live significantly better is one of the motivating factors that keeps them working tirelessly to develop better solutions.
Compliments from satisfied customers provide a sense of achievement that for some entrepreneurs is as important as the financial rewards they earn.
Fortune magazine publishes an annual list of the top 100 companies it considers they work for, but thousands of business owners don’t need national media recognition to know they’ve made caring for their employees a priority.
How hard your employees work, how committed each member of your team is to the goals of the organization.
They measure this aspect of business success in how many employees stay with the company for five or 10 years or more, sometimes throughout their career.
Factors that contribute to the success of a business
Several factors contribute to the success of a business, and understanding what they are and how they work together can help your business succeed.
A business plan is the plan you must use to operate your business. When you contemplate opening a business, you should create a business plan that describes all of your business operations, including staffing needs, all budgets, sales and marketing procedures, manufacturing processes, and revenue projections.
Take the time to develop your business plan, and get feedback from people with experience in your industry.
Make several drafts before deciding on your final plan and prepare to follow that plan in depth.
Keep your plan dynamic by making updates as your business changes, and try to use your plan to help attract investors as well
In some cases, you have control over business times, and in other cases you do not. If you were to open a movie rental business, then your business hours could be paramount.
Analyze the market and pay attention to consumer trends before deciding what type of business to open.
If you can create a business that is at the forefront of consumer needs, that can contribute significantly to the success of your business
If you place your road transportation business several miles away from major highways, airports, and train stations, then your company’s location can make it difficult to succeed.
Bringing your business closer to those key locations can reduce costs, making it one of the closest companies to your customers.
Location can be critical to a company’s success.
Controlling your company’s costs means keeping all your overall costs under control, including manufacturing operations, advertising and location.
By continually working to reduce costs, you can free up financial resources that will be applied to expand your product line or increase your marketing efforts.
Small Business Failure and Success Factors
Starting a business can be the key to financial independence or the road to ruin. Statistics for start-ups are certainly daunting, with 90% of start-ups closing their doors forever.
According to Elizabeth Wilson of Entrepreneur magazine, while about 40 million businesses start each year, a minimum of 350,000 go out, and start growing and making money.
Making sure your own company is among the top 10% means avoiding some common business pitfalls.
Underestimate startup costs
One of the most common mistakes business owners make is underestimating the amount of money they actually need to invest to run a business.
Some initial costs are predictable, such as the cost of a new building or renting equipment. However, other costs are less easy to anticipate, and companies that don’t account for those surprises may find themselves out of cash just when they need it most.
Business owners tend to underestimate both the up-front costs and the costs associated with acquiring and maintaining customers.
When costs are underestimated, something as simple as the collapse of a key piece of manufacturing equipment could leave a new startup unable to operate and pay its bills.
Depend too much on others
The departure of a key employee, or a disagreement with a business partner, can leave the company in a difficult situation, unless the business owner has taken the time to learn all aspects of the company.
Relying too much on a handful of key workers can be a big mistake, and could even cause the business to fail.
Regardless of the nature of the business, it is essential that the owner understands the variety of jobs and functions within the organization.
This will allow the business owner to intervene if necessary, even if it means driving a delivery route when the courier service closes unexpectedly or finding a service for a server when the IT person is sick.