Success in business requires a true comprehensive look at the business both internally and externally. Most businesses fail. The numbers most commonly stated are 80 to 90 percent of businesses fail. So, in this episode, the topic is how to reduce the probability that yours is one of those failures.
By understanding and knowing what might cause failure, you are also aiding both the success and the growth of your company.
When starting a business, you should always have at least the basics of the business plan. This serves several purposes. The most apparent is keeping you on target and focused. However, it also drastically increases your probability of success in business. With limited time, I will cover the various topics that should at least be monitored.
You should have a thorough industry analysis that is continuously look at and updated. An industry analysis includes an understanding of the size of the industry, the technology being used and its future as well as the changes affecting it.
Customer understanding an analysis are of course key to developing the right product and positioning that product to be attractive to the customer. This includes more than just an avatar person, but the comprehensive demographics.
A thorough understanding of competitors as well as potential competitors. Potential competitors really means the ease of entry into the business. Yes, if it’s easy for you to get into the business, it is easy for others to enter as well. That means even if you found a profitable business it may soon be crowded with competition.
Also, there is only so much in a person’s budget. For example, if you are trying to sell the latest antioxidant juice, it is not only other juices that our competitors. You have competitors from other products that reduce people’s antioxidant levels as well as the limits on a person’s willingness to spend on their health. That is, everyone has a budget constraint even if it is a little flexible.
Customer satisfaction, while often quoted, is usually not well understood. It can be so much more comprehensive than just keeping somebody happy that is buying your product. While it is very difficult and much more expensive to get new customers, many businesses forget how important it is to keep existing customers happy and returning.
Probably the most important factor in success in business is good financial planning. Rapid growth can actually kill a business. Yes, one company that I know, grew too fast.Now almost everybody reading this, will gloss over this part as it is and can be one of the most boring. However, 70% of business failures our caused by business financial mismanagement. One example I discuss is a $10 million company that almost went out of business because it was growing rapidly and their success was actually killing them.
Taking a comprehensive look at your business helps you to see the alternatives. You are constantly having in mind the overall long-run goals of the company and the pieces needed for long term success. Too many people focus on the short run and dying in the long run.
This episode was partly motivated at the request of a listener along with the constant drum beat of bad advisors telling people to do things at most times don’t make sense. Please, only take advice from people who have done it. There’s enough information in social media and other websites to differentiate whether somebody really has the background and experience to justify the advice they’re giving. I continuously see people who just want to start a business and the business they start is either business advice or business coaching or life coaching. Starting your business is not hard, but being a success in business is.(See Episode 11)