How to Achieve Success When Running a Business
Why Do Businesses Succeed?
Being a successful business owner involves more than having an innovative idea and working tirelessly. It requires knowing how to run and expand your company effectively, as obstacles will inevitably come your way; how well you overcome these difficulties will determine whether your venture succeeds (D&B 2008). If you want the best chance at achieving success with your venture, do these things:
- Be Aware of Your Company. While this may be obvious, successful business owners are well-informed about their industry (both the present and expected direction), as well as competitors. They know how to draw customers in, who the top distributors and suppliers are, and the impact technology has on their operations. Essentially, these individuals understand what makes a successful company tick and know exactly how their operations fit into the larger scheme of things.
- Learn the fundamentals of management in business. While you might have an amazing idea for a business venture, to truly manage it you need to understand all aspects of operations such as accounting, finance, management, marketing and production. Furthermore, be a great salesperson as well as an informed decision maker with strategic plans.
- Maintain a positive outlook. As the owner of your company, it’s up to you to make it successful. In order to commit time and energy towards making an idea into an enterprise that succeeds, passion for what you’re doing must be present. Having faith in what you do requires unwavering personal dedication towards making it successful.
- Finding the Right Amount of Capital. Establishing an enterprise requires a substantial amount of money, and then you must guide it through its initial phase (which could last up to one year). Even with an excellent marketing plan and highly-skilled management team, without enough funding your time as a business manager could be limited. Plan for the long run and collaborate with lenders or investors so you have enough capital to start up, stay open throughout this early period, and eventually expand.
- Controlling your finances effectively. As the boss, you’re under constant pressure to make enough money for payroll and other obligations. That’s why it is essential to monitor cash flow – both incoming and withdrawn funds. Manage costs efficiently and collect any owed money quickly. Generally speaking, understand how to gather financial data necessary for running a successful business.
- Control Your Time Effectively. As the new owner of a business, you may expect to work sixty hours per week. In order to expand and enjoy some personal time aside from work, you need to relinquish some control and allow others to do certain aspects of your job. Consequently, develop the capacity for managing time effectively as well as being able to transfer accountability.
- Management Skills. Finding, keeping and motivating great employees is paramount to the business’s success. As your business expands, more reliance will be placed on those employees you employ. Therefore, it’s essential that you build trust with them, educate them properly, and motivate them to provide high-quality products or services.
- Make sure your customers are completely satisfied. Customers may be drawn in by great advertising campaigns, but loyalty will only be earned if you provide top-notch products or services. Your commitment should go far beyond meeting or exceeding customer expectations.
- Be aware of how you can effectively compete. Determine your niche within the market. Be cognizant of your competition and be flexible enough to adjust according to changes in conditions. As the old adage goes: “Adapt or perish”. That sums up business (and most other aspects of our lives) perfectly: remain aware or perish.
Why Do Businesses Fail?
If you’ve been paying attention to the retail stores in shopping malls over the last few years, you’ve noticed how rapidly retail shops change. Restaurants also experience rapid transformations as do all sorts of businesses. While many small and large enterprises succeed, a significant portion fail. One third of small firms that employ employees go out of business within one or two years; nearly half have closed by their fourth year and 70% by year seven (Knaup & Piazza, 2011; 2007).
Though these numbers may not seem grim, business survival in certain industries can be more challenging than others. If you plan to remain in this field for an extended period of time, it might be wise to steer clear of high-risk industries. Though your peers may think you’ve perfected macaroni and cheese pizza, that doesn’t guarantee success as a restaurant owner. Opening any type of restaurant or bar can be one of the most risky ventures (which is why start-up financing can be challenging to come by). Avoiding the transportation sector is also recommended. Owning a taxi may seem appealing at first glance, but once you factor in how much a license costs – which varies by city but is as much as $400,000. Establishing a clothing shop can be complicated. Your perception of “what’s popular” may not reflect current trends, and one bad season could put an end to your business. This same challenge exists for businesses selling communications devices; each mall typically houses at least one or two mobile phone shops, leading to high competition and slow business (Farrell 2011).
Companies often fail for a variety of reasons, but many experts believe the majority of failures can be attributed to any combination of the following issues:
- Poor business concept. All ideas for businesses aren’t always perfect, either in their conception or execution. If you were trying to sell snowblowers in Hawaii, for instance, your chances of success are slim – failing could be your fate if the market collapses before long.
- Cash flow issues. Many new businesses lack adequate financing. The business owner takes out a loan to start, yet does not have enough money to sustain operations during the early stages, when little income is coming in but much is being spent.
- Manager incompetence or inexperience. Many new business owners lack managerial expertise and lack experience running a company. While they may know how to create or market an item, they may lack insight on managing employees. It could be that they lack talent-driven employees; or worse yet, the owner lacks basic management abilities and lacks motivation. These issues could indicate an underlying lack of planning ahead.
- One major advantage of a small company is the capacity to pay particular attention to customers. Unfortunately, some small businesses fail to take advantage of this advantage due to lack of knowledge or inability to adapt with changing market conditions or practices tailored towards rival customers.
- Increased sales can seem like a good thing, but when sales suddenly surge it could turn into something serious. As businesses expand, the role of the owner changes; they must delegate tasks to others and construct structures for handling increased volume. Unfortunately, many business owners fail to adjust and become overwhelmed; work doesn’t go as planned or customers become dissatisfied, leading to negative consequences for their companies.
Assistance from the Small Business Administration
Which do you prefer: vanilla Oreo, triple chocolate, or Latte? Over the past few years, cupcake shops have sprouted up everywhere – perhaps due to economic downturn making people crave tasty yet budget-friendly desserts. No matter the motivation, you’re excited by the prospect of opening an online cupcake shop. You’ve identified the ideal location and already purchased all necessary equipment – plus, of course, sampled countless recipes (and eaten plenty of delicious cupcakes along the way!). Now all that remains for you to do is find that perfect location! Are you all set, but there’s one major obstacle: not enough cash for all your startup costs. After trying unsuccessfully at local banks, are you left wondering what should you do now that no bank will loan you any money? Fortunately, assistance can be found! Your local Small Business Administration (SBA) offers a range of programs to assist both new and established small business owners. The Small Business Administration (SBA) does not loan money directly to individuals; however, it increases your odds of receiving financing from a local bank by guaranteeing the loan. This is how the SBA’s loan guarantee program works when you submit an application to obtain financing through your local bank. A loan officer determines whether a bank will loan you money without an SBA guarantee. If there is no answer (due to some flaw in your request), they then decide whether they will lend the funds if the SBA ensures the loan. If they choose to make this loan, then you will receive it and must repay it; if not due to default, federal government pays any losses up to that amount that was insured by the SBA guarantee.
By speaking with someone from the Small Business Administration (SBA), you’ll discover additional programs they have available to help launch and run your bakery business. When applying for financing, a well-written business plan must be submitted. After receiving the loan and moving forward into start-up phase of operations, many questions must be addressed (e.g., setting up an electronic system). You know you’ll require assistance in many areas when running a bakery business – the good news is that SBA can assist in all management and technical services tasks as needed.
Assistance is accessible through various means, including the SBA’s extensive website, online courses and training programs. Customized services are also provided. The Small Business Development Center (SBDC) assists current and future small-scale business owners in overcoming problems with their businesses while offering technical and training regarding all aspects of small business management. These services are accessible at over one thousand locations throughout America – many located within universities or colleges (U.S. Small Business Administration 2011).
For personalized guidance from experts, SCORE Service Corps of Retired Executives (SCORE) can offer assistance. Through this program, those in need are assigned an individual from a group of retired executives who volunteer their services. Together with the SBDC SCORE assists millions of small-business owners annually (U.S. Small Business Administration 2011; SBDC Economic Impact 2011).
Business owners face numerous challenges, and how well they are able to address them is critical in determining whether their venture succeeds or fails. If you are a business owner,
here are some essential steps you must take:
- Be familiar with your company. Successful business people have a deep-seated understanding of their industry and know who their competition is.
- Gain the foundations of management in business. To effectively manage a company, you need to comprehend all aspects of operations–accounting, finance, management, marketing and production.
- Maintain a positive outlook. You must feel secure in what you’re doing and have the willpower to follow through with your plan.
- Make sure you have enough financing. Plan for the long term and collaborate with lenders or investors to guarantee you have enough capital to open your doors, remain open during the initial stage, and eventually expand.
- Controlling your finances effectively begins with keeping an eye on cash flow – what money enters and leaves your business. Furthermore, you must understand how to collect the financial data necessary for running the operation efficiently.
- Make time efficient. You need to master time management and the art of delegating responsibility effectively.
- Be mindful when managing employees. Create an enjoyable working atmosphere for everyone involved, ensure they receive adequate training and motivate them to provide high-quality goods or services.
- Make sure your customers are completely satisfied. Your commitment should include going above and beyond to meet or even surpass their needs.
- Discover how to compete effectively. Identify your niche within the market. Stay alert to competitors and be prepared to adjust when things change in the business world.
Companies often fail for a variety of reasons, but many experts believe the majority of failures are caused by one or more issues:
- A flawed business plan. Just like any other idea, your business plan could have issues from its inception through execution.
- Cash flow issues. Many new businesses lack adequate funding.
- Incompetence or lack of experience in management. Many new business owners lack the necessary skillset and experience to run a company effectively, as well as inadequate knowledge about managing a workforce.
- Lack of focus on customers. Many owners fail to fully take advantage of the advantages that a small business offers in terms of being able to focus on serving their clients.
- Capacity to Manage Growth. As businesses expand, many owners fail to delegate their work or create an organization structure that can accommodate increased volumes.
The Small Business Administration (SBA) offers services to both potential and existing small-business owners, such as assistance with creating a business plan, starting an enterprise, obtaining funding and running the business.