How To Build A Successful Business – Almost anyone can start a business. After you fill out a few forms, get the necessary permits or licenses, offer a legitimate product or service, and advertise it a bit, it’s safe to say you’re a business owner. However, running a successful business is a completely different story. Many factors affect the success of a business which can be internal or external. In this article, we will share the latest data you need to know before opening a small business, the main reason why they fail, and a few pro tips on how to run and maintain a successful business. Here is a table of contents to help you navigate the important information you need to know: 2021 Business Success and Failure Statistics In the United States approximately 1 in 12 new and old businesses close each year. On the flip side, more than 4 million were opened in 2020 alone, the biggest surge the US Census has reported in over a decade. According to the US Census Bureau, the overall number of business applications fell in early 2020 as the Coronavirus pandemic unfolded, then increased sharply in mid-2020 and continued to rise (seasonally adjusted) through Q1 2021. But, the census data also shows that the number of business applications for planned wages (WBA) and high bias (HBA) has increased by almost 45% in January 2021 compared to December 2020 — and that includes seasonality. That is good news. And while the failure rate for startups is about half, with around 50% calling it quits after the first five years, it means that 50% survive past the mark five years. The outlook depends on how you view the proverbial glass – half full or half empty. The Bureau of Labor Statistics says nearly 80% of new businesses do it in their first 12 months. While that may surprise you, it’s definitely a much better statistic to focus on. The specific numbers change depending on the industry, so keep that in mind. Some industries, such as health care and social assistance, have a much higher than average survival rate. Other rates, such as construction and transport, are lower. Why Businesses Fail There are, of course, many reasons why a business could fail. According to research, however, there are some that are more common than others. No marketing. If you build it, they will not come. The presence of a marketing strategy is one of the indicators of whether a business will make it or not. Marketing spans everything from finding customers to later upselling them on new products and services. Featured Tool: Free Download Marketing Plan Template Poor customer service. With new businesses appearing literally overnight, price and product are not enough to differentiate you from the competition. How you treat your customers is. Invest in training your customer service team (or yourself if you’re the only employee) on the best practices to please your customers. No plan for graduation. People start businesses for many different reasons. Some want to make ends meet with a side gig, others want to replace their full time job and be their own boss. Whatever your reason, decide in advance whether you want your business to expand beyond just you as an employee. Sometimes, marketing is unpredictable. Businesses are going viral for doing great work and are not prepared for the influx. Knowing in advance whether you will meet the moment or let it pass can save you from FOMO, or even having to close your business because you did not have the necessary preparation to scale. No need. A great service or product will get you nowhere if there is no need for it. Due diligence and market research are essential in the early stages of starting a business. Decide who would buy the product, how often, and why. This helps you not only find your niche but also plan inventory and forecast sales as well. No money: Launching and building a business is expensive. You need capital, investments, loans, and/or revenue to see you through the lean times. A detailed budget can help you keep track of revenue and expenses. The wrong people. The most successful business owners and entrepreneurs know that they surround themselves with people smarter than them. If you decide to expand your business, you will need a strong team to help you do a great job. The only way to do this is by recruiting and hiring the best people. Too much competition. If the market is already saturated, and there are already plenty of established providers, you’re fighting an uphill battle. Wrong Price. If your prices are too high and you are limiting your customer base. If they’re too low and you’re not pulling in enough revenue to stay afloat. But that’s not all. There are plenty of other business and industry specific reasons why businesses fail. Taking the time to get honest feedback from customers, employees, and external stakeholders unrelated to the business can help you spot these red flags before it’s too late. Featured Tool: Download Free Pricing Strategy Calculator If you are planning to start a business, you must actively work to make it successful. It won’t happen overnight. You will need to research, study, and learn about your industry, customer, and marketing inside and out. How to Run a Business Understand the market and define clear KPIs. Draft a business plan. Set revenue and profitability goals. Create a human resources team. Hire the right employees. Offer benefits to staff. Implement the right tools for your growth strategy. You have to start at the beginning. The old adage that you must look before you leap applies not only to your business (ie, market research, professional goals, buyer personas) but also to you personally. 1. Understand the market and define clear KPIs. Do not underestimate the importance of conducting careful and detailed market research. You need concrete data on your ideal customers, current competition, expected growth and demand, market trends, and more. These types of insights are invaluable and help you make informed decisions and business goals. You will also need to be clear on the four Ps: product, price, promotion, and place. They can guide the creation of your market research, marketing plan, and customer personas, and serve as a great starting point if you’re not sure where to start. The four elements of the marketing mix are evolving, and you may want to explore the eight Ps that more accurately reflect modern marketing. They include product, price, place, promotion, people, process, physical evidence, and performance. With business goals and research in hand, don’t forget to think about what you want personally too. There’s a reason why airlines instruct us to put on our oxygen mask before helping others: if we don’t take care of ourselves, we can’t take care of someone else. Likewise, if you don’t have personal goals and plans for your mental health, you won’t be as effective in running your business. 2. Draft a business plan. Whether you’re creating a formal business plan, or documenting professional goals, workflows, or anything else, these thoughts need to be written down somewhere and shared with all your stakeholders. In the digital age, this is easier than ever before. A live document stored in the cloud and accessible to everyone not only allows for consistency and collaboration but also for evolution over time. Changes can be made, saved, and shared automatically. It is not enough to just set goals and processes. Research reveals that we are actually more likely to achieve and remember them when we write them down. We learn better when we create rather than just read. Make a plan. Set goals. Create workflows. And write them down. Feature Tool: Free Business Plan Template for Free Download 3. Set revenue and profitability goals. For a business to be successful, it must make enough money to sustain operations and turn a profit that can be reinvested for future growth. Factoring in your business costs including sourcing, production, staff, capital, and more, determine how much money your business needs to bring in monthly, quarterly, and annually to succeed. This is also a great time to revisit your pricing structure. Are your products priced appropriately? How many units will you need to sell each period to reach your revenue and profitability goals? Document and lay out this information clearly so you know exactly what you need to do to keep your business running and thriving. 4. Create a great human resources team. Businesses often overlook the power that culture and employee engagement can have on every part of the company, from recruitment to exit interviews. “Good HR combined with an arsenal of great tools can change your company for the better,” says BambooHR’s Ali Anderson. “Happy, engaged employees do great work, and company growth will quickly follow.” According to Anderson: When companies invest in their training and onboarding processes, they will find that their employees are more prepared to do great work and take on the challenges of the business. Take action to
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