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Reasons Why Businesses Succeed

April 29, 2010 by Frank Goley, Business Consultant

In my previous blog post I discussed reasons why businesses fail. Wouldn’t it be nice to know why businesses succeed? Let’s get to it…

Characteristics of Successful Business Owners

There are certain qualities successful entrepreneurs share in common.  Some types of people are more suited than others to go into business for themselves, but I am a big believer that one who naturally doesn’t have the typical entrepreneurial characteristics doesn’t necessarily mean he or she won’t be a success.  However, knowing these entrepreneurial commonalities can give you an idea of your propensity to be a successful business owner:

1)     Desire Independence

2)     Strong Sense of Initiative

3)     Motivated to provide for family

4)     Expectation of Quick and Concrete Results

5)     Ready to act and react quickly

6)     Very dedicated to the business

7)     Entered the business as much by chance as design

The Entrepreneur Test

Below are 20 personality traits to gauge your potential as an entrepreneur.  On a scale of 0 to 7, with 7 the highest, rank each personality trait:

1)     Ability to Communicate

2)     Can Motivate Others

3)     Organized

4)     Accepts Responsibility

5)     Can adapt to Change

6)     Decision-Making Capability

7)     Have Energy & Drive

8 )     In Good Health

9)     Good Human Relations Skills

10)  Have Initiative

11)  People Person

12)  Good Judgment

13)  Open-minded

14)  Planning Ability

15)  Persistent

16)  Resourceful

17)  Self-Confident

18)  Self-Starter

19)  Good Listener

20)  Risk Taker

Scale:

110-140         Very Strong

85-109           Strong

55-84             Fair

54 and below  Weak

As an entrepreneur myself, I tend to be on the strong side of these traits.  But not every successful business owner is strong in every one of these areas.  This is why successful entrepreneurs’ recruit those who are strong in the areas they may be weak.  If you are a hard worker and have the drive to be on your own, then over time you can develop and work on improving these useful skills. 

Resource: See my article on CEO Leadership Skills for more details.We have discussed reasons why businesses fail and what are the common traits of successful small business owners. 

Wouldn’t it be nice to know some of the reasons why certain small businesses are successful?  It is important to know what not to do as it minimizes mistakes, but being proactive and knowing what to do can significantly increase your chances of success. 

What Leads to a Successful Small Business?

A Good Business Plan

Going off what I said in the previous blog post about business failure due to inadequate planning, it is absolutely essential to have a good Business Plan and good planning within your business.  What’s the distinction?  You can develop a good business plan, but if you don’t implement it and make it a part of the fabric of your business, then its usefulness is minimal.  However, to develop an effective Plan, you need to have a good business planning system to employ, and it is often very helpful to work with an experienced Business Consultant in its design, development and implementation. 

Resource: For a Comprehensive Business Planning Process, please consider my Business Planning Guide and Workbook.

An Adequate, Well Defined Market

Market Research is critical as it gives your planning a dimension of predictable results.  It links your Product Development with your Strategic Plan. 

Resources: For more information on developing an Effective Marketing Plan, please see my article on Market Analysis & Planning. For comprehensive Market Development advice, see my article on Small Business Marketing Strategies.

Understand Industry and Market Trends

Understanding both where your industry and market are heading is important to staying competitive and continuing to meet your customer’s needs.  Never assume you have captured your market and can sit on your laurels.  Install Marketing Systems in your business to continually analyze and predict customer and market behaviors and needs.  Having consistent contact with your customers can help you produce better products, offer better suited services and grow along with your trending market. 

Obtaining and Using Accurate Information

Accuracy in planning market trends and business growth must be reliant on information that is accurate and realistic.  Then taking that accurate information and applying it to your present and future business capabilities is an important process.  You must be realistic as to whether you can effectively exploit the potential of the information with your given human, operational and financial resources.

A Good Capital Acquisition Strategy

It is important to come into a business with a strong equity position.  You can then leverage off that cash strength with competitive, appropriate financing.  A cohesive Financial Strategy, and implementation of it, is vitally important to a business’s success.  A business needs not just adequate capital, but the right type of capital for the business, its goals and objectives. 

Resource: Please refer to my Business Finance Articles for more assistance in developing and implementing a Successful Financial Strategy for your business.

Effective Recruiting and Strong Human Resources

Going into business with the right people and subsequently recruiting and retaining good people is vital for a business’s success.  Often a talented, experienced, highly-skilled employee will save you money in the long run and be very effective in a crisis; as compared to, scrimping on your labor costs, having to constantly train new people, relying on more people to get the job done and experiencing high-turnover and low employee morale. 

Resources: Please see my articles on Small Business Recession Tactics and Compensation Planning for more help on hiring and retaining the right talent for your Company.

Expertise and Experience

From the Company’s Founders and Principals to the employees in the field, a high level of experience and expertise is necessary to effectively compete in today’s markets.  The most successful entrepreneurs, bar none, are those that surround themselves not just with talent, expertise and experience, but have people on their team which fill the gaps in their personal experience base.  We are only as smart and talented as those we surround ourselves with.  Know your limitations and have the right people on board to fill the gaps. 

Understanding the Implications of Government Regulation in your Business, Market and Industry

Being surprised by changing regulations is not good.  Keep yourself well educated on Government Regulatory Trends through good government relations and active membership in Industry and Business Associations.  The efficacy of your product, service or market can change 360 degrees on the whims of government.  So be involved and cognizant of this significant element.

Effective Time Management

A small business owner is pulled multiple directions at the same time all day long, every day.  Your ability to multi-task is important, however, putting systems in place to effectively balance tasks and time is just as important.  Delegation and planning are essential in effective time management.  As pointed out previously, you must have good people around you to delegate responsibility, as well as, to assist you in managing your time as effectively as possible.  Effective Time Management is a function of good planning as one comes with the other. 

Hard Working for Long Hours

Last but certainly not least, Successful Business Owners must be willing to work very hard and spend many long days and weeks getting the job done for their customers.  The Entrepreneur is often the first one to arrive early in the day and the one who leaves late in the day or night.  Having a good Business Plan helps the successful business owner to work “smart”, but there is no way around good old fashioned hard work, particularly in the early stages of a company’s growth.  You must be willing to put in the long hours to reap the benefits of self employment.

Concluding Advice

If you are contemplating starting a new business, do something you really love to do and have a passion for.  The work is hard so you might as well enjoy it.  Providing a great product or service to your customers is a worthwhile experience and should be something you really believe in.  Passion is what carries you through the inevitable rough patches, no matter how well you plan and set up your Company.  Small Business is simple:  see a need and fill it.  Working hard will be replaced with working smart as you build your Company over the years, gaining invaluable firsthand knowledge.  You will find, though, as your Company matures, the real thrill for an Entrepreneur is the start-up phase, when you build something from scratch and do it successfully.  Good luck in your endeavors.

Posted in Business Growth Strategies.

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