There are a couple of questions we get asked a lot. “How to run a successful business?” and “How do we get from being a start-up to being a successful and established business?”
We have studied hundreds of different businesses and have identified five characteristics most of them share.
- They have a strategic direction and a clear plan for how they will achieve their goals.
- They monitor performance regularly to identify and solve problems in the business.
- They have the resources and infrastructure to keep ahead of the competition by analysing the market and reacting to it before their competitors.
- They are continually improving its processes to save money, improve products and create a better customer experience.
- They are making a positive impact on the community, employees and customers.
Business Success Formula
We have simplified this system and created our business success formula. This will help you to run a successful small business.
PM + (PS * (EO – (C+E+P)) = Successful Business
Let me explain.
For a business to be successful, there must be a Profitable Market (PM) and a Product or Service (PS) that satisfies its needs and/or its wants.
It’s not enough to just have a great product or service anymore. Business success depends on your Product or Service firstly being noticed by the Profitable Market through effective marketing campaigns; then by selling enough of your Product or Service to have enough Cash or Fuel (F) to repeat the process.
This is called the Engine (E) of your business.
The more efficient the Engine is, the more profits you make. This is called Engine Optimisation (EO).
Engine Optimisation (EO) is mainly an internal process. However, your business subject to several external threats you have to overcome.
Competition (C) from other businesses is the main external threat. Your business can also be affected by Market (PM), Economic (E) and Political (P) factors that need to be monitored.
Characteristics Of A Successful Business
Now let’s look at the characteristics that most successful businesses share and what you need to implement them in your business.
Before you even start your business, you must understand the market you are about to enter. For a business to survive in the long term, the market must be profitable and sustainable.
Profitable: Your ideal customer must be able to afford your product or service.
Sustainable: It’s fine to be in a niche market, but it must be large enough for you to realistically achieve your business goals.
Quality, Relevant Product
First, you need to ensure there is a product/market fit. Before you launch your business, you need to know if your ideal customer is interested in your product or service.
Research them, find out exactly what they need and want. Find out their fears, desires and what makes them buy.
To take your business to the next level your customer has to transcend from just needing your product or service to wanting it and, choosing it over your competition. A customer will pay a lot more money for a product or service they want over one they need.
For example, most people need a mobile phone. They don’t need an iPhone; there are many high-quality and more affordable options on the market. People buy an iPhone because it helps them to increase (or maintain) their social status.
To reach this level, you have to create a quality, reliable product or service and build a reputation for your business. There are no short-cuts and no guarantees to a successful business.
Business (Engine) Optimisation
Engine optimisation is the key to growing a successful business. Your business must be focused, efficient and responsive to both customer and market demands.
Key components of engine optimisation
Business Strategy & Planning
A well thought out business strategy will help you map out what you need to do to achieve your goals. You don’t need a long business plan, just a one-page document that is well executed.
Business Strategy Basics
Your vision is the framework for all of your strategic planning. It needs to be both attainable and ambitious. Your vision must embody the passion you have for your business.
To achieve your vision, you need to set a set of core objectives to help you to reach it. Objectives should be specific and should provide you with a clear set of actions to accomplish your vision.
Goals are specific actions you need to achieve each to reach each of your objectives. The key to making great business goals is to go beyond just what you need to do but to explain how you will do it.
A sound financial plan is the cornerstone of a business plan. It should last for the time-span of your vision and be aligned with your objectives and goals.
These assumptions should be reviewed against actual performance regularly to ensure you are still on track and re-forecast.
Successful businesses understand the need to continuously improve their business processes to become more efficient. This enables them to respond to market changes and provide better products and services to their customers.
Having solid, adaptable systems is crucial for success. Effective technology doesn’t have to be expensive. Use technology to simplify business problems and to spend more time on revenue-generating activities.
Poor marketing, along with bad financial management is the main area that causes startups to fail. Successful businesses build a marketing machine that generates limitless qualified leads and buyers.
Understanding your target market is the key to creating a successful marketing campaign. The more you understand your target market, the more likely you will choose the correct marketing channel to reach them and create campaigns and messages that will get them to buy from you.
The specific sales approach a company uses is usually defined by its marketing plan. You should have a consistent, measurable and repeatable sales process. This needs to defined in your marketing plan and fully tested before you scale your business.
Analysing your competition can help you supercharge your own business by finding weaknesses in your competitors and offering your target market a better offer.
Proving there is a need and a profitable and sustainable market for your product/service is the first step in building a successful business. However, just because a market exists, it doesn’t mean they will buy from you. Every business has a competitor or an alternative. Your competition is this the biggest threat to your business that you cannot control. To succeed you have to research your competition, both direct and indirect, and develop a strategy that will get people to buy from you instead of them.
There are 3 main ways to develop a strategy to develop a competitive edge.
1. Cost Leadership
Becoming the lowest price supplier or retailer in the market will give your business a competitive advantage.
You need to decide whether your business provides a “no frills” product/service by stripping out additional extras, or you deliver the same as your competition but at a cheaper price.
Remaining the cost leader is difficult as your competition will try and lower prices to compete, there is little point in reducing your prices so low you won’t make a profit. When pursuing a cost leadership strategy you need to be careful as it can lead to a reduction of quality, this may affect your reputation and sales.
You can stand out from your competition by approaching the market in a different way than your competition. Your differentiation strategy can be offering more convenience, higher–quality customer service, better customization of the product/service or a better warranty. The most important thing is you must differentiate yourself from the competition by giving the customer something they value. When a customer values a product/service, they are willing to pay a premium to obtain it.
Before adopting this strategy, market research is required to find out what your target market values.
Sometimes the best product is not always the leader. It is usually the business that understands the market the best that becomes the leader.
A focus is competing on the basis of being a specialist in a particular market, providing a narrow range of products/services.
This strategy can be extremely profitable for a small business if they can effectively market their business as larger companies tend to ignore niche markets.
To assess what is the best strategy for your business, you need to take into consideration:
- What the market wants,
- Which looks most attractive for your business
- Gaps in the market.
- Which strategy fits in with your business strategy.
The best way to choose your differentiation strategy is by analysing the competition and looking for gaps in what they are offering.
If you are still struggling to find a way to get your business ahead of the competition there are 7 tactics you can choose to give your business a quick boost.
1. Be More Efficient/Faster
Does your product or service get more done than your rivals? Is it quicker? Easier to set up and disassemble? Speed is an incredibly powerful sales tool.
If you have to deliver your products to your customers try to reduce the time it takes for them to get their products. Customers will appreciate this, even if they have to pay an additional cost.
2. Be Responsible
Try to run your business in an ethical and environmentally friendly manner. Have this as one of your core values and ensure all of your employees and customers are aware of this.
It really pays to care and respect for the community, given a choice most customers would choose an ethical product over an unethical one.
3. Provide better Customer Service
This is such an easy one, be polite, build relationships with your customers and respond to complaints quickly and calmly. It’s that simple. However, it’s something some companies find impossible to do well.
The fact that you pay attention to your customers will increase the chance they stay loyal, even in bad times.
4. Give away something for Free.
The “Power” of free is dominating the digital economy. It has revolutionised the music and literacy industries. You must be prepared to give something away for free to gain new customers.
This is applicable with any industry, there is too much choice for consumers, you have to draw people to your business.
Giving something valuable away for free is the most powerful way of doing this.
5. Build a better quality product.
This is also an easy one, although it can take some time to improve your product or service. Become the market leader in terms of quality, even if this means increasing the price.
There is always a demand for premium products.
6. Better payment options
This is a difficult one if you’re an early-stage business because cash flow is so the key to your survival, but if you’re established and have enough money in the bank to allow a 90-day payment period, you have a big edge over companies who cannot afford to do this.
7. Give Them A Guarantee
This is especially important for start-ups and service companies.
To reduce the risk for the buyer offer them an industry-leading guarantee for satisfaction. A time-limited money-back guarantee is always a good option.
For your business to thrive you cannot ignore your competition. If you are not analysing what they are doing you can be certain they are analysing what you are doing and adapting their products, services and processes to beat you.
Take at least one day per month to look at your competition and analyse what they do better than you and try and close the gap. Also, look at what you do better than them and try and find ways to improve upon this.
Keys To A Successful Business
Statistics don’t lie. 80% of start-ups fail.
Do not let this put you off starting your own business. Most of the businesses were doomed to fail because they weren’t set up in the right way.
The keys to a successful business is our Business Success Formula. If you start your business using the Business Success Formula as a blueprint, you will decrease your chance of failure significantly.
If you are already running a business, then you need to act quickly and re-structure your business and incorporate the Business Success Formula.
We can assess your business and implement our business success formula in our business assessment service The Business 360. It provides you with all the information to make your business successful in a matter of weeks. You can check it out here.