When it comes to starting a new business there are some startling facts out there. Fortune Magazine claims that 9 out of 10 startups ultimately fail and the US Census Board reports that despite more than 400,000 new businesses being founded each year, 470,000 actually die. With figures like that, you’d be forgiven for believing that getting into business is a near-impossible task, but sometimes the figures can be misleading.
In the above two examples, it is unclear as to what defines the ‘failure’ or ‘death’ of a business and both statistics also neglect to give a time frame. A better statistic to work from would be this, from the Small Business Administration that claims that 50% of businesses fail within their first year of business and of those that remain 66% of them will survive their first two years in business. Suddenly the facts seem more in the entrepreneur’s favor, but what are the key components of starting a successful business? How can you ensure that you end up a part of the favorable 66%? In this article, we’ll take a closer look at 8 of the key components of a successful business.
- A simple, clear and concise vision
You may have a great idea for a new product or service but without a clear vision, you could struggle to communicate that to your audience and may end up steering your business in the wrong direction. A company vision is so much more than just having an understanding of whatever it is you are planning to sell, a vision encompasses your company values, your market direction, your one, three and five-year plan and your company targets. For many new businesses coming up with a clear vision is actually one of the hardest parts of the start-up process, but it is one that shouldn’t be overlooked if you are planning on remaining successful years down the line.
- A real value proposition
Every entrepreneur thinks that their product or service is valuable, but the key to determining if you have a real value proposition is to find out if your target audience also sees value in your product or service. To put it bluntly, you need to remove your own bias from the equation in order to determine if what you are offering is actually worth selling or not.
- Hiring the right people
The people you choose to employ within your business can potentially become your greatest asset or your greatest liability and so it’s vital that you hire them wisely. At the very beginning of your business, it can be tempting to hire people you know based on emotion rather than their suitability for the role and this approach can ultimately hinder you in the long run. Regardless as to whether you need to hire one of ten people to get your business off the ground, treat each and every hire as though you were looking for your company CEO, the people you hire now will need to see you through the toughest days of your business and therefore need to demonstrate the same passion and drive as you do.
- Knowing your customers
Knowing your potential customers underpins many aspects of your business. Don’t leave getting to know your customers until you’ve reached a marketing stage, start asking yourself these questions now. What are their pain points? How does your product or service solve their pain points? What channels can they be reached through? How do they respond to various types of marketing? The more you know your customers, the more you can ensure that your value proposition fits their needs.
- Keeping track of your competitors
It would be naive to start any business without first understanding the competitor companies that are already out there offering the same or similar service. Competitor analysis can be daunting and, in some cases, off-putting, but it’s important for you to realize what your USP (Unique Selling Point) is going to be and how you are going to win the edge over your potential competitors. It can be easy to let competitor analysis become an all-encompassing task which can ultimately cause you to neglect your own business needs. Keep an eye on the competition but don’t let it consume you.
- Being adaptable
Another key component of a successful business is adaptability, which can be achieved through digital transformation, as explained further in this post – https://www.intellectsoft.net/blog/what-is-digital-transformation/. Adaptability simply means having the ability to change in order to stay competitive. A business may need to adapt for many reasons, a new competitor could come to market, the needs of your audience could change, or you may simply find that a current event puts a spanner in the works of your production and you need to find a way to keep on trading.
- Remaining consistent
Although it’s important to be able to adapt when necessary, businesses also need to remain consistent in order to deliver what is expected time and time again and to build their brand trust and loyalty. Consistency may seem difficult to achieve during the turbulent first few years of your business, which is where having a clear vision comes into play, ensuring that you remain consistent with your company values and goals, no matter which direction you take.
- Capital
Last but not least, successful businesses require capital, or at least they need to know how to use whatever capital they do have. The amount of capital you have does not necessarily correlate to the success of your businesses and even those businesses with excess liquidity can still fail. What’s important when it comes to capital is that you know how to use it and that you have the right people around you to help you execute your plans.
In conclusion, a successful business is not built on simply a good idea or product but consists of many factors, each of which works together to bring about the business’s ultimate success. The above 8 components of a successful business are a good starting point to work from with many others coming in to play to keep your business afloat and to ensure its long term success.
