The key factors in business success
I have owned many businesses and I had spent years working with small business owners.
I have seen business owners going from 10 employees to over 1000 employees within five years and I have seen start ups that have received ton of money from investors and they end up shutting down their doors within one year.
There are so many variables and factors that goes into starting and building a business success, but I believe the main factors are:
- Your motivation and drive
- Your business and finance expertise
- Your available time and your time management skills
- Your available finances
- Your marketing expertise
- Your skills or experience in a particular industry, products or services
The above factors are more likely the “must have” attributes; however, if you have a lot of available finances, you can hire an expert in business, finance and marketing and at that point, you more likely won’t be reading this article, you will be calling your business expert to give you advise on when and where and how to start and market your business.
There are other factors that are important, but these factors are secondary and may not apply to all cases and scenarios. These factors are:
- Business Location (applies to a physical store.)
- Competition
- Business Liability
- Your emotional intelligent level
- Your management skills
- Your sales and communication skills
- Sustainability of the business industry
Let’s go over the first set of business success requirements:
- Your motivation and drive
This is straight-forward. Starting a business requires dedication, focus and motivation. If you’re spending a good portion of your time on TikTok, other social media apps, dating apps, or on things other than your new business venture, then your new business is not your top priority and its success will be difficult.
- Your business and finance expertise
Business requires planning, legal business formation, knowing the business and tax laws, knowing labor laws (if you’re going to have employees), knowing about profit, expenses and overhead, for example, planning and assessing about when you will be profitable, how much you should spend on business until you’re profitable, what to do if some of your business plan fails, how to protect yourself from business liability, etc..
- Your available time and your time management skills
Again, a business takes a lot of time and effort. You must have available time to dedicate to your business and you must have the ability to manage your time accordingly.
- Your available finances
You can start a business, I think as little as $100; however, how are you going to pay your rent? how are you going to pay for your food, health care and essential expenses?
So having the money and managing it well plays an important role in making it in business.
- Your marketing expertise
Every business requires some sort of marketing. You can always hire an expert, but I believe, especially a small business owner must have some marketing experience or education. In the past, when I was trying to help small business clients with their business marketing, if they had no experience or education in that area, they would take charge and destroy their business brand, so having a marketing experience or some education in marketing can be very helpful in business success.
- Your skills or experience in a particular industry, products or services
If you have worked for a small business or a particular industry and have gained experience in that industry and start a business in that industry, you have much better chance to be successful at it.
If you do not have any experience or expertise in an industry and start a business in that industry, it will be a huge uphill battle to make it, unless you buy an existing business and have the owner train you before completing the business sales transaction or hire an honest expert in that industry to help you learn that business.
Let’s go over the second set of business success requirements:
- Business Location (applies to a physical store.)
If you’re going to open a retail physical store, then the location is very important. Of course you will need to have some experience in the type of retail business that you’re starting, you will need to look into the competition and assess the profitability of the business versus the overhead.
Starting a retail business sometimes requires a long-term big investment of time and money. For example, some retail spaces require 10 years lease at a very high dollar cost per SQFT, so you must be careful about what you’re getting into or you may go bankrupt having a long-term high cost lease.
- Competition
This is straight-forward. If the specific industry that you’re getting into is a highly competitive industry, then you will have an uphill battle to be profitable because you have to keep competing and reducing your profit margin in order for your business to stay afloat.
- Business Liability
Cost of litigation in any business can run very high, I’m talking about hundreds of thousands of dollars. Practically if your business gets sued, you can get sued even though you’re a corporation or LLC. So, if the specific industry that you’re getting into is a high liability industry, you may want to avoid that industry.
Of course, you can purchase business professional or error and omission insurance, but if you get sued a couple times, the insurance companies will not insure you anymore.
So in my opinion, unless you’re up to it, know that a high liability business is a headache business.
- Your emotional intelligence level
A business owner with the high level of emotional intelligence traits has the ability to communicate better, manage the business better and get along with clients, vendors and employees better. He/she can better handle stressful situations, better assess and seek clients, vendors or employees that also have high level of emotional intelligent and therefore the business owner will have a better team of employees and will attract better clients.
In general, a person with high emotional intelligence level, have much better chance in being successful in business.
- Your management skills
If you own a business that must have employees, you will need to have good management skills to manage your employees.
Business owners that are too laid back will struggle with employees who will take advantage of them and business owners who are too totalitarian and controlling will not be able to attract and keep good employees.
A good business manager will have the ability to establish a reliable and dedicated team of employees that will work together to build a successful business.
- Your sales and communication skills
If you own a business that requires sales, you will need sales skills.
If you’re focused too much on selling your product or services, that you’re willing to use unconventional tactics such as not being honest to your prospective clients in order to earn their business, then you will not make a good and successful business.
Also, overselling or low-energy selling are both a sign of poor sales skills.
If you sell products or services, you will need sales experience in order to be a good salesman.
- Sustainability of the business type or industry
There are certain business types or industries that are in decline in US because:
- Major competition from online businesses
For example: At one point, owning a small physical travel agency store was a lucrative business, you would find those small retail travel agency stores in many shopping centers, now they are mostly gone because most travelers use online travel companies such as Orbitz, Expedia, Travelocity, hotels.com and others.
- Major competition from off-shore
For example: At one point, contract manufacturing in the US was a lucrative business, now, most manufacturing jobs are contracted to off-shore companies due to lower cost of labor.
- Decline in demand
For example: At one point, you could find many small retail computer stores selling and repairing desktop computers, software and selling computer parts. There is a decline in owning desktop computers as more and more consumers and even small businesses are now switching to laptop computers, and just about all software companies have switched from selling software as a retail package to selling their software as an app in the app store.
