Every entrepreneur believes that their business venture will be successful. Yet, studies show that 20% of new businesses fail within the first year, while a total of 70% fail in the first five years. Are you looking to launch a business that will stand the test of time?
If yes, then we suggest that you take a read of this article about the foundations of a successful business.
Success is something that is measured in a long-term timeframe. Your business performing well for a few years should not be taken for granted. Your current success must be employed to ensure success in the future. This is why the most successful businesses spend a significant part of their profits back onto the business.
Profits can be reinvested in a number of ways, such as by buying new equipment, hiring more skilled staff, and acquiring competitors. Success depends on being able to offer more value than your competitors. In order to maintain this proposition of higher value, you must then put in the right effort and resources to guarantee this continuity.
In addition, reinvestment is not just about maintaining your business’ current offerings. It can also be about expanding your company both vertically or horizontally. An example of vertical growth can be acquiring suppliers and distributors. While horizontal growth will include buying businesses in the same or similar industry.
Every company heavily depends on its employees. The greatest businesses give incentives for their staff to stay and continue developing at the company. The reason why it is good for your employees to stay at your firm for a long time is that it means that they will be experienced, and you won’t need to spend as much money on training.
Adequate pay is a way to start; research shows that when your workers are better paid they will be more efficient, which actually results in company savings. It will also mean that a larger proportion of your employees will build an affinity for your organizations and will spend a long period of time working for you.
There are also firms that offer money to employees that want to leave the company. The sum of money is usually enough to allow the ex-employees to support themselves for a few months.
To add to this, many large organizations also pay for their employees to re-train. Private companies take these steps in order to make sure that only the employees who really want to work for their company remain and advance in the business.
Strong Consumer Demand.
There has to be actual demand for what your business is producing or providing. A business that is built on a trend such as a certain style of bracelet will struggle. Examples of things that there will always be demand for include food, shaving razors, and also personal hygiene products.
As the saying goes you do not have to reinvent the wheel, instead, in order to make a successful business, you should identify a permanent demand that people will have. Consumer demand can be divided into two groups, needs and wants.
Goods and services that people need will always be in demand will generally have low-profit margins which are offset thanks to a large market. On the other hand, companies that provided what consumers want, have larger profit margins, but serve smaller markets due to differences in tastes.
The brand is one of the important foundations of a successful business. Building a brand means that your business represents something to consumers. Common traits that brands try to instill in the minds of customers is the company provides supreme quality or value for your money.
Branding is not just done so more people know your company. It is important as it increases the likeliness of customers choosing your product or service over your competitor’s. If you have never heard of a company, you are less likely to be willing to spend money on what they provided. Especially if it is a big purchase.
To add to this, marketing is used to explain what you do. If your business is involved in something that is brand new then you literally have to tell customers what the value actually is. To give an example, in the 1970s the home computer became cheap enough so that it could be bought by everyday consumers.
The PC (Personal Computer) manufacturers had to make the public knowledgeable about what they could do with a PC. Such as type documents, play video games, and store information.
Data Powered Decisions.
Regardless of how intelligent you may think you are, decision-making must be based on information. Data is raw figures and facts, that when logic is applied to them turns into information. A successful business cannot simply go on a whim and making uninformed decisions. Instead, they have to take time and carefully figure out what is the right approach.
An advantage to using data is that opinions and feelings can be totally minimized. This also makes it easier to work as a team since there is a clear understanding of how the management team will make their decisions. Thus eliminating any politics or hurt feelings.
In some cases, there may not be any reliable information available. In such a situation, you should conduct a trial run on a small scale in order to analyze the quality of the idea.
For example, if you run a supermarket store, then you can experiment with self-checkout technology to see if it will work. To conduct a small-scale experiment, you will only have to install it in 3 out of your 100 stores, which is fast, effective, and if needed reversible.
The world changes fast, and it will always be changing in one way or another. Whether these changes are due to consumer tastes or technological innovation. You do not want your business to be left back in the previous era. Humans naturally do not like change, as it makes us uncomfortable. However, it is important to overcome this fear as an entrepreneur.
Many major retailers and food outlets have disappeared as they did not want to adapt to the new reality of e-commerce. One of the most off-putting aspects of adapting is that it will hurt your current business model. For example, you will have to shut down a lot of physical stores and restaurants as you transition to a more online-centric business.
In business, this is often known as self-cannibalization, as you are shrinking the company in order to grow. But this should not dissuade you from making the right decision. No one said business is going to be easy, and sometimes in order to ensure a bright future you have to make some temporarily tough decisions.
It is no longer enough to start a business just to make a lot of money. A mission statement should be included in the foundations of a successful business. So, what exactly is a mission statement?
To give a brief overview, a mission statement is a pre-agreed document of the positive impact and the values that an organization should always aim towards. Usually, when a mission statement is adopted it applies forever, with the possibility of minor tweaks or additions.
Many business owners are worried that a mission statement will transform their business into a charity. This is actually not the case; a mission statement gives an extra goal of the company apart from turning a profit.
An example of this can be banks working harder on making finance more accessible to lower-income business startups and home buyers. Furthermore, it can be as simple as having the goal of making the goods you sell in your supermarket affordable. This is so customers have more money left over.
A mission statement will help to motivate everyone involved in the company and also provide meaning to your organization. It is also an extremely attractive trait to customers who will like to contribute to a business that has a positive impact.
Read the article: How to Scale Your Business Correctly?