Success factors in business
Success factors
By Hilbert Haar
The idea to establish a support fund for struggling local businesses sounds sympathetic and I agree that businesses that have trouble making ends meet through no fault of their own deserve that support.
Whether any business manages to keep its head above the economically troubled waters obviously depends not only on the market but also on a range of other factors.
I get it: somebody has an idea that sounds good and turns it into a business, expecting that the products or services this company is going to provide will find buyers. If there are no buyers, a company will quickly go out of business.
The question is now which factors contribute to the success or the failure of any business. Let’s take a look at the success factors.
A company needs to provide products or services that people want. If there is no demand, there is no business either. Success does not just depend on the quality of those products or services. There is also the matter of price. Are there any competitors? What does their pricing look like?
Are my prices too high or too low?
Price is important, but so are quality and service. What are you going to do if there is a problem with your products or services? Do you leave your customers out in the cold or are you going to help them out? If your customer service is really really bad, social media will kill your little enterprise within a week. Nobody wants to deal with a business with an extremely bad reputation.
Bad news travels much faster than good news. If your products and services are good, clients tend to share their experience with others, but word-of-mouth takes much more time than a bashing on social media.
When you establish a business you usually need: a. a piece of real estate; b. (office) equipment; and c. qualified staff. All this is going to cost you money and if you don’t have it, you have to borrow and the interest on such loans is going to affect your bottom line.
I think that reliability is one of the most crucial success-factors. If clients know that you will never let them down (even if it is going to cost you money) they will remember that. If you send everybody who returns with a complaint away with a flea in their ear, they will remember that too. And that, my friends, is going to cost you much more in the long run – if there is a long run to begin with.
Good products or services, sold at competitive prices and backed by excellent customer service will always come out on top.
Businesses must have a proper administration system and they need people who know how to handle this stuff. You have to pay your bills, otherwise you are going to be kicked out of your premises and you need a good understanding of the fiscal system in your jurisdiction.
Quite some people consider the tax inspectorate as their enemy and this way of thinking influences their behavior. The reality is: it is always better to get in touch with the tax inspectorate if you have a problem, then ignoring them hoping that your problem will go away. Trust me, it won’t.
Small and medium enterprises are the backbone of any local economy. Because of their size, these are often family-businesses. And the owners of those businesses more often than not turn a blind eye to the problems that are coming at them. They know they are losing money, but they do not want to give up.
That sounds brave (or rather: stubborn) but is it the right thing to do? I think not. If your business is losing money, you’ll have to ask yourself how long you will be able to stay in the game. If you have deep pockets: no problem. If you are moneywise on life support it is time to get out. Close the damn business and go do something else.
In my lifetime I have encountered many struggling small businesses that did a lot of things but not what they should be doing namely, close their doors. These small entrepreneurs kept their doors open until late at night while there was never a customer in sight. It is not difficult to see that it is at times cheaper to close down than to keep your doors open.
On the other hand, you could also have a viable business that got into financial trouble due to external circumstances. Hurricane Irma and the covid-19 pandemic are two examples that are still fresh in most people’s minds. Those companies deserve to get all the support they can get.
But if your troubles are rooted in under-pricing, bad marketing, bad quality and bad service you are definitely in the wrong business. In those cases only one piece of advice makes sense: get out.
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