During my 30+ years of running businesses, I’ve learned a thing or two about business success and what you need to know to build a successful business.
Is business success down to bold, risk-seeking leaders, visionary leaders, a keen eye for innovation and market trends, speed to market, strong financial banking, being in the right place at the right time, or just good luck? Perhaps a combination of these factors is at play.
I’ve observed eight principles that together form a solid foundation for helping leaders create and sustain a thriving, successful business.
8 principles for building a successful business
#1 Connect with your WHY.
When asked WHAT they do, most people can speak about it at length. They might have a quick answer and, when pressed, will give you tons of details about their business’s logical, technical and procedural aspects. You are probably the same. We don’t have any difficulty at all explaining our WHAT.
But let me ask you something different: WHY do you do what you do? What’s the purpose behind it? What made you decide to do it in the first place?
The problem with answering the WHY question is that many either aren’t sure or they’ve completely lost touch with their reason.
But is a compelling WHY really that important?
Within the top 10 most watched TED talks, with more than 20 million views, is a talk about finding your WHY. Called ‘How great leaders inspire action,’ management expert Simon Sinek speaks exclusively about finding your why and the need to be part of something and do something with meaning.
#2 Spend your time wisely.
In managing and growing your successful business, there will be areas that you enjoy and are good at, and there will be areas that are daunting or simply not your area of strength.
Here’s the great news. You don’t need to be great at everything!
You will still need to dip in and out of the broad facets of running a business. This will never change. That’s what we do as owners, leaders or entrepreneurs. However, what can change is the areas that get your attention and the level of involvement you commit to that area. For example, if HR and employee regulations are not your strength, work with an external partner who specialises in it.
The growth of outsourcing functions such as HR, Marketing, and Finance and the creation of virtual teams you tap into as and when you need them means you don’t have the overhead/costs directly, but you do have the expertise to hand.
But a word of caution.
Don’t fall into the trap of getting bogged down in the everyday operational stuff, in the weeds sorting out problems and challenges. You’ll feel trapped and boxed in while the people you hire are doing all the exciting, fun parts of the business.
You’re connected with your WHY (principle #1), and you have clarity in what you enjoy doing and where you add the most value, so you must play to your strengths too. Use your strengths to help others improve, but don’t lose your opportunities to use your strengths, as this is where your motivations (your WHY) stem from.
#3 Be consistent in action.
Be consistent in action over time, consistent with vision and values, consistent in delivering against short-, medium-, and long-term goals, consistent with performance standards and culture. Consistent, consistent, consistent!
Successful businesses are relentless in their focus and quest for disciplined execution. Their leaders are capable of immense perseverance and unyielding in their standards and disciplines. They constantly push themselves to find better and faster ways to merge the present with the future to realise their goals.
They don’t overreact to events, make knee-jerk decisions or succumb to the herd mentality. They don’t leap for alluring but irrelevant opportunities, which can detract them from their core focus. But, they will pivot and change the route if the roadmap no longer leads them to the right destination.
You’ve probably had that feeling when you’re full of great ideas. But the day’s demands compete for your attention, and your good intentions and personal promises for change get pushed to the wayside. And the longer you put them off, the lower the probability you will fulfil them.
Become disciplined in executing your strategy and ideas before they die quickly, burying your future goals and vision with them.
#4 Create a solid business plan.
You are in the driver’s seat of your business and must have a plan that translates how you will turn your WHY into reality. You cannot leave it to chance. Business success is not an accident.
Your plan should typically cover a 3-year line of sight of financial goals, a 12-month plan detailing strategic priorities and milestones and a 90-day tactical plan.
Initially, you will need to invest time in creating your plan, but you will reap the benefits as you regularly reality-check your plan to evaluate what’s working and what isn’t, make timely adjustments along the way, and adjust course where needed.
#5 Focus on your customers.
Become fanatical about your customers. Adopt ‘outside in’ thinking to ensure your customer is the focal point of everything you do and how you do it.
The marketplace is ultra-competitive, and complacency is not an option. In a fiercely competitive world, your competition is trying to poach your customers, new entrants are appearing from nowhere, and old rivals have got their act together and are on the offensive. Even when it meets your customers’ needs and wants, offering a good product won’t cut it. You’ve got to have a great product or service.
Your customers are asking why they should buy from you, and you must have the answer and be able to back it up with your actions.
#6 Make it easy to do business with you.
We have an innate ability to overcomplicate and over-engineer life, which certainly applies to business. Would you describe your business as a tugboat or an oil tanker?
Perhaps utopia is to have the scale and size of an oil tanker yet the mentality and agility of a tugboat!
#7 Talk benefits, not features.
A feature is what the product/service has or what a product/service is. An advantage is what the product/service does. A benefit is how the product/service solves a problem or improves something in your customer’s life.
If your customers can answer, ‘What’s in it for me?’ you have been discussing benefits. Remember, your customers will ask questions about all the features and advantages, such as ‘How does it work?’ and ‘Does it do this?’ So you must ensure these are translated into benefits, as that is what they are buying from you.
Do this, and your customers will become your raving fans, telling their friends, neighbours, and colleagues just how good you are. But you have to walk the talk. You have to be good at what you do.
#8 Manage your cash flow.
Managing your cash flow is critical and can stifle your growth potential if you get it wrong. Your cash management strategy is fundamentally about one measure: your debtor-to-creditor ratio.
Nearly every business is both a creditor and a debtor and proactively managing the ratio between these two levers is key to funding growth ambitions. You are not a bank. You are not there to provide a free credit facility for your customers, yet too many businesses indirectly fall into this trap. Don’t let your debtors treat you like one. It will stifle your growth potential and lead to sleepless nights because you won’t have the cash to pay your people or bills.
Stage payments and credit checks are sound financial strategies in business today. Where feasible, make credit checking an integral part of your up-front processes. Check a customer’s credit rating when doing business with them.
It’s not just debtors paying late that will stifle your growth. The potential of having to write off a bad debt could be the difference between building a successful business or a business set for failure. Don’t fall into this trap.
Remember, turnover is vanity, profit is sanity, and cash is reality.
