If seven out of ten businesses will not last ten years, what makes businesses succeed? With research and experience, I have come up with a list of the top 10 reasons businesses succeed.
1. Strategic Foresight
2. Contingency Planning
3. Manage Cash Flow
4. Diversification of customers, products, and services
5. Hire the Right People
6. Systematic Processes and Habits
7. Continuous Improvement and Education
I remember that when I finished my MBA and passed the CPA exam nearly 20 years ago, I never wanted to study or take anymore classes. What a mistake! We have to keep learning and growing. Now it is easier than ever with podcasts, audiobooks, online courses, and workshops. Employers also must have a plan for growing and learning not only direct skills for them to do their job, but also soft skills such as communication, conflict resolution, and leadership. Companies of less than 100 employees only spend an average of 12 minutes every six months training employees. It gets worse for companies with greater than 100 employees in which it is only six minutes every six months.
What if companies invested more in training? No matter what, it is your responsibility to get the training you need, and it doesn’t have to cost much.
8. Grow Expenses with Revenue
I have worked with so many businesses that are too revenue focussed, and the expenses get out of hand. I have seen 50% revenue growth and less profits. What if you expect revenue to grow more and hire and increase expenses accordingly, but then the revenue ends up less? In small businesses, this can happen easily. What if we think we are going to grow by 50%, and we only grow 30%? It isn’t like 30% growth is bad, but it is if your expenses are going up 50%. I like the strategy of setting your expense budget on a more conservative forecast scenario while setting your revenue targets at a more optimistic view. I know this may put you behind in the hiring process, but it is safer than the other direction. One caveat may be if you are receiving an influx in cash or are a start-up. In this case, you are still ramping up. If you have the cash, then you may need to do this. As a general rule, I would take a conservative approach to expense increases and make sure you have the revenue to support it before hiring or making other significant investments. Your Profits and Cash Flows will like it.
9. Quality Marketing and Business Development
It is common to cut marketing and business development when the following things start happening:
- Growing the business fast and don’t have the personnel to meet customer needs.
- A bad experience with marketing or salespeople with little return.
- Running low on cash and need profits.
I am sure there are other reasons, but no matter what, you have to continue marketing and business development. It is all about momentum and consistency. When you stop, you put the brakes on building the pipeline, and it will take time and energy to get started again. I have experienced this personally in my own business and with clients. My advice is not to stop, but actually increase if you can. Now, if you are struggling with customer service, this may require hiring or better planning, but I would not stop if you can help it. Carve out the time and resources to keep the pipeline flowing, and it will pay dividends for years to come.
10. Excellent Customer Service
Excellent Customer Services seems like a no brainer, although this can be challenging when growing quickly. Growing too fast could lead to more mistakes and letting customers down. I have found the following to be helpful in the service industry:
- Regular check-in to ask questions and see how to do better.
- Own up to mistakes and tell them how you will do better next time.
- Understand process break downs and develop procedures that will mitigate errors.
- Ask clients to provide feedback or review of services.
- Look for a way to exceed expectations.
Starting, growing, and sustaining a business is hard work. What if more than three out of ten businesses lasted more than ten years? How great would that be for the economy? More businesses would meet their dreams. How many more jobs and innovations would we have? I desire for more businesses to be successful and grow. Let do what it takes to work on your business and beat the odds and practice these ten recommendations for success.