Have you ever wondered why some businesses are successful while others are not? The keys could be found in this list of things every small business needs to be successful.
If you have just launched a new business or have been in business for some time, you likely have more than enough things on your plate to get done in any given day. Running a business can be a lot like juggling when you first begin, but it is critical to building a solid foundation so you can eventually arrive at success.
While many business owners have good ideas and even can push them toward commercialization, the majority of failures that happen in starting and growing a business come from not having specific things in place to make a business successful. Building a business is not necessarily rocket science. However, without the right tools, it could get started on the wrong foot and be difficult to turn around.
Companies must realize the similarities and differences between why some companies fail and why some companies succeed. Specific aspects of this comparison will guarantee that you have a solid foundation upon which to continue building and have the tools to grow and become successful.
To succeed in business today, you need to be flexible and have good planning and organizational skills. Many people start a business thinking that they’ll turn on their computers or open their doors and start making money, only to find that making money in a business is much more difficult than they thought.
You can avoid this in your business ventures by taking your time and planning out all the necessary steps you need to achieve success. Whatever type of business you want to start, using the following nine tips can help you be successful in your venture.
An owner strategy generates alignment among owners, board members, executives, and employees, which, in turn, improves both performance and satisfaction. Think of it this way: if owners are clear about how they want to keep score, board members and management teams will know how to win. That clarity also allows companies to define success on their terms, rather than someone else’s. And isn’t that the point of owning a business, or working for one?
Defining an owner strategy requires asking two basic questions:
There are three broad goals that owners can seek. They can aim for growth, meaning to maximize the financial value of the business. They may pursue growth to build long-term wealth, broaden their impact on society, or for the psychic rewards that accompany getting bigger. They can also seek liquidity, which is to generate cash flow for the owners to use outside of the business. Liquidity can be useful to pay for lifestyles, fund philanthropic efforts, or allow owners to have more independence by diversifying their assets. Lastly, they can want control by keeping decision-making authority within the ownership group. Some owners want control over their own destiny and don’t want to give up their autonomy to anyone else. Others value control as a way to run the business in a way that preserves what they value, such as a distinctive corporate culture, or having a company that lasts for generations.
Most successful businesses face a trade-off between the pace of growth, how much liquidity the owners take out of the company, and how much control the business retains over its decisions. A company could pursue only one of these goals or some mix of the three. But for most companies, this is a “pick two problems,” meaning they can focus on two at the expense of the third.
Growth-control (GC) companies are focused on getting bigger while maintaining control over decisions. They grow primarily through their retained earnings, paying low (or no) dividends to the owners. They also have low (or no) external equity or debt, since answering either to outside investors or borrowers requires surrendering a level of autonomy. When outside equity is taken on, it is often done on a limited basis or through dual-class shares that ensure the core owners maintain control (as in Google/Alphabet and Facebook). The avoidance of debt is often a surprise to those used to looking at widely-held public companies or private equity firms, who seek to maximize returns through leverage. For private companies, debt can be useful but is usually recognized to come at the cost of control. Closely-held public companies will often take a similar view.
Growth-liquidity (GL) companies are also growing rapidly. Still, they are paying out money to the owners and using other people’s money (equity and/or debt) to keep the engine going, giving up some control as a result. When companies go public, they are adopting this strategy. Private companies can use it too. We worked with one business that had a lot of growth potential, but the owners were concerned about the long-term threat for disruption in their industry. So they sold a stake in their business to a strategic investor and used part of the proceeds to diversify into other areas.
Liquidity-control (LC) companies are not concerned with how rapidly they grow, but instead, want to produce significant liquidity for the owners while allowing them to maintain control over decision-making. Elisa and Mark fit this profile as owners of their watch business.
These are broad types, and companies can find a space in between. But, as they move from one part of the triangle to another, they are making trade-offs among the three main goals.
Each of these core types brings its own advantages and risks to be managed. And we know of highly successful companies that follow each path. The key is for the owners of a company to be aligned on what goals they want to pursue, recognizing that there are trade-offs among them. It is also important to revisit these trade-offs as things change, either external factors like the economy and industry consolidation, or internal factors like a shift in ownership or senior management. What worked brilliantly in one environment can be a disaster in another.
We have found that aligning on the priorities of the company is extremely helpful. But to make it real, these broad goals have to be translated into specific ways of measuring performance. And that leads to the second question:
Guardrails are boundary conditions that the owners want to put on the company’s actions based on their goals. They define what is in and out of bounds.
Guardrails can be financial or non-financial. On the financial side, they should align with the mix of growth, liquidity, and control that the owners want to prioritize:
In our experience, owners should hone in on a small number of financial metrics (usually four to six) that can define whether or not the company is successful based on what matters to them—doing so balances are providing clear guidance to the company’s leadership with leaving them ample opportunity to figure out the best business strategy.
Many owners are willing to sacrifice some level of financial performance to achieve other objectives. Oftentimes these objectives are not stated explicitly, but it is essential to define their non-financial guardrails. In our experience, they typically fall into four main categories:
There are no right or wrong answers in defining guardrails. The key is to create alignment among the owners on specific metrics and targets that measure success and inform major decisions.
In order to codify their alignment, the owners of a company should draft an Owner Strategy Statement, which not only articulates their goals and guardrails but the rationale behind them.
The statement should be as specific as possible. The acid test is: does it help the company make decisions that require trade-offs? For example, one business we know set a 15% return on invested capital (ROIC) target for its retained earnings. During the time that the market was expanding, they reinvested almost all of the profits back into the business. As the market matured, they began to reduce investment and increase distributions to shareholders.
Whenever you sell a commodity or a considered purchase with an extended sales cycle to consumers and businesses, you need content in multiple formats describing your product or service.
In the B2C world, creating memorable content that positions your brand above your competitors is the goal—content that will ultimately resonate with your target audience and support your overall brand. While in the B2B world, you will want to structure your content in a manager that moves a buyer through all the stages of the buyer journey. Your content should support the buyer’s need to learn about what it is you offer, help them solve a problem, allow them to compare, drive them to make a purchase, and foster loyalty for your brand.
All the content you create must address the following issues in this order:
Think conversational marketing—not targeting. Focus on the consumer’s pain points and the ways you address that pain, while also reinforcing your brand’s position in the marketplace.
Now that you have your content in place and have pinpointed your audience, you have to find a way to reach them. In the B2C space, that might mean buying a TV spot, sending a direct mail campaign, buying keywords on search engines, or even and renting an outdoor billboard on a busy highway…there are plenty of channels to pick from.
In the B2B space, the same rules apply. Still, you will most likely find yourself spending more money on online channels like email, search engines, content syndication, social media, and even targeted ad display.
Regardless of the channel, the more data you have about your customers and potential customers, the more targeted you can be with your campaign, and the more likely you are to be successful with your marketing efforts.
For example, the more email data you have, the more reach you have. The more data you have on your consumers, the better your chances to reach your consumer on email, social, or direct market channels. The data available to you combined with analytics will help you understand which piece of content resonates with each segment or audience.
There is no shortage of technology in the marketplace; trust me. IMA has catalogued over 3700 marketing technologies on Martech Showcase that cover tactics from account-based marketing tools to webinar platforms and everything in between. Please avoid the shiny object syndrome (Martech) and focus on technologies that will help you track marketing effectiveness.
While you can do some amazing things with Google Analytics if you don’t have the expertise to set up advanced media attribution reports to determine what is working your marketing efforts, find someone who can do it for you. Alternatively, you might be a good candidate for a marketing automation platform. In addition to google analytics which is free, MAP can help you track where a lead first encountered your brand and score their behaviour, helping you align your sales and marketing efforts and nurture leads automatically.
Regardless of which technology you use, you should track the effectiveness of your campaigns down to conversions. You might find your search engine marketing (PPC) campaign has a higher cost per lead but converts better than any other marketing channel. Or you may discover your email marketing efforts drive more traffic and conversions than your content marketing and SEO efforts.
A great company is only as good as its great employees. Without the right people around the table to support your idea and help bring it to fruition, you will likely be managing everyone and everything. It is impossible to effectively lead if you are busy micro-managing every aspect of your business. The solution to this is to work on talent acquisition and recruitment and ensure you get the right people who will grasp your vision and are willing to help you achieve it. Spend your time and energy on recruiting people who are likely to become good leaders, not just bosses.
Money. Money. Money. All businesses need money to run. Two things can happen when it comes to money. You can have all the money you need to operate and get comfortable. Or you can have all the money you need to operate and waste it on frivolous things that your business could do well without. Having proper checks and balances in place is essential for creating a successful business. Hiring an accountant can be pretty pricey depending on the type of business you have and what type of work you do, but in many cases, it is definitely worth the effort and the money. Online software is available for generating pay stubs, creating invoices, and keeping track of expenses and income.
For almost any business to operate in the digital age, it is imperative to have the right technological systems and programs in place. Identifying the type of solutions your business needs, and ensuring everyone on your team knows how to use them will be imperative. Also, it is important to have a team member or even a dependable contractor who can identify issues before they happen and deal with crashes or other technical problems. If they are trained and know what they are doing, it will be a very valuable asset for your company.
Launching a business can be very excited and stressful at the same time. But these six things will be extremely helpful in ensuring you are on the right path toward success. There is no magic bullet or secret formula to ensuring a successful business. It is mostly experimentation and good hard work that wins the day. If you ask any successful business owner, these six things will be somewhere on the list of business tools for success.
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Guest post by : team Form -
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