Business Startup Keys to Success
As more and more people join the ranks of entrepreneurship, more and more information comes available about the right way to drive the success of your startup. The SBA offers a list of factors common among successful startups, such as “has employees” and “knowledge of the business.” The Inc. 5000 fastest-growing companies article offers other interesting statistics about the various factors that drive the success of these ventures. At the end of the day, any and all business success can be boiled down to three keys – Planning, Marketing, and Financial Management.
Planning does not mean simply filling in the blanks of a ready-made business plan template or worse, buying a completed business plan for your type of business. Good planning should result in a virtual roadmap of your business idea and include every detail of how, when, where, and to whom you will sell your product. In order to create this depth of planning, you need a thorough understanding of your product and industry, your area’s legal requirements, your target market, and the available avenues for marketing to your most likely customers. You need to develop an accurate assessment of your sales and expenses and how they will be affected by changes in other factors. You need a general idea of where you want your business to be in the long-term, and plans that are flexible enough to respond to the rapid changes in today’s marketplace.
Planning doesn’t end once your business is up and running, but is a continuous process that keeps your business on track and alert to opportunities as they arise. All planning should include clear objectives – goals that are specific, measurable, and achievable – with set deadlines for completion. As objectives are met (or not), the results should be evaluated and lessons learned from these efforts should be incorporated into future objectives. Consider using a 90-day planning strategy, where objectives are set and completed within a 90-day timeframe. The shorter time encourages more realistic goal-setting while providing for the flexibility needed for small businesses to grow and thrive in an ever-changing marketplace.
Marketing your business efficiently is absolutely critical for all new businesses, but is often neglected by first-time entrepreneurs. It is not enough to place an ad in the Yellow Pages and post a simple website. Search-engine optimization is a critical marketing tool, but one that tends to intimidate non-tech-savvy business owners. In reality, SEO is not difficult and much can be done for free with just a few hours of computer work per week. In addition to online marketing, a combination of the five classic marketing elements (advertising, sales promotions, public relations, personal sales, and direct marketing) also must be incorporated into a successful marketing plan.
Your marketing efforts must be carefully researched and evaluated to ensure you are getting the best return for your marketing dollar. Marketing is how you drive customers to your product and keep them coming back – it is not a business factor to be taken lightly. Take the time to learn and understand all you can and use the right tools to ensure your marketing plan is complete, workable, and gives the business its best chance to succeed.
Financial management is a key to success for obvious reasons – the primary purpose of going into business is to turn a profit! It is critical for the business owner to set up an accurate accounting system and to understand how to evaluate the numbers. You need to understand your business’s financial reports and profitability ratios in order to track and manage all areas of your business. For many first-time entrepreneurs, dealing with the numbers seems overwhelming. In reality, a good small business accounting software does the hard work for you by producing the needed financial reports. Learning to read these reports and understanding how to use them (comparing ratios to past performance or to industry averages, for example) is not that difficult, and is a huge factor in whether a business succeeds or fails. The trick is to stop telling yourself that you are not a numbers person – if you are a business owner, you are a numbers person!
The first of the three keys to business success is Planning. This does not mean throwing together a basic business plan using ready-made templates, or crafting a paragraph that says all the right things filled with industry jargon. Actually planning your business entails delving into the details of every aspect, from legal compliance to marketing to operations. Planning is not just a requirement for startup, but should be an integral part of business management.
Obviously, startup planning is critical. A good plan will create a road map for starting and running your business. You will be knowledgeable about every aspect of your venture and comfortable making the best decisions at the right time. For every area of your business, you will be familiar with the options and the advantages and disadvantages of each. Whether you ultimately decide to outsource or delegate certain functions, such as bookkeeping, marketing, or other non-core competencies, you will have a solid understanding of the outcomes you expect.
In addition, good planning will alert you to potential opportunities and threats to your business idea and get you thinking about different ways to handle them. If a marketing effort isn’t working, you will have several backup options ready to go. If the market demand changes, whether increasing or decreasing the desire for your product, you will be ready to respond such that your business experiences limited growing pains or is able to change direction quickly. With this sort of in-depth picture of your business, your risk is greatly reduced and there will be few surprises as you build your business. You’ll be the entrepreneurial version of a boy scout – always prepared.
The need for good planning doesn’t stop once your venture is up and running. Ongoing planning for growth and preparation for changes is essential, especially in today’s marketplace. It is best to establish the habit of continuous planning early in the life of your business. At least every 90 days, schedule time to review how the business is doing and develop objectives for improving profitability and the efficiency of your operations processes. Even businesses that are booming can make improvements by streamlining processes, improving inventory management, motivating employees and in many other areas.
Large, established corporations conduct strategic planning sessions as a matter of course, but are not always successful implementing their objectives through the layers of bureaucracy. As your business grows, include your key employees in your planning processes. Encourage your staff to contribute ideas for dealing with opportunities and threats. Keep an eye on your industry, and be prepared for the inevitable changes. Develop clear objectives that can be measured, and evaluate the progress frequently.
To make good planning an inherent part of your company’s culture over the long term, develop good habits now. Schedule time to set objectives for yourself and hold yourself accountable for meeting them. The way you do business now will be the foundation for the culture your company develops, so be attentive to the standards you set for yourself and plan now with the future of your business in mind.
Marketing is the second of the three keys to business success, along with planning and financial management. Marketing is critical for obvious reasons – if nobody knows your product exists, they can’t buy it! It is common for entrepreneurs to underestimate the importance of putting in the time and energy to find the best marketing avenues for their business.
As with everything else in today’s society, marketing is changing quickly, with new opportunities popping up every day and old standards falling aside. It is no longer enough for any business to simply hang out a shingle and place a Yellow Pages ad. Rather, entrepreneurs must be aware of how and to whom they are targeting the marketing message, create an online presence of some variety, and find the right mix of the five classic marketing elements to maximize the return of their marketing dollar.
Identifying your target market, or the consumers most likely to purchase your product or service, is often overlooked by first-time entrepreneurs. Many figure that the people who need the product will find it and that will be enough. In fact, the most important aspect of identifying your target market is determining how to reach as many of them as possible within your marketing budget. For example, if you are selling a golf club cleaner, your market is golfers, right? So, it would probably be beneficial to advertise in Golf Weekly, alongside all the other golf gadgets. But what percentage of all golfers read Golf Weekly? Certainly not all of them, not even ten percent. Your broad market of golfers includes men, women, juniors, all economic classes, all education levels, and all areas of the US. In addition, there are different types of golfers – occasional, recreational, competitive, the golf vacation crowd, the public course crowd, members of country clubs. Which of those demographics is really the most likely to buy your product? By identifying multiple characteristics of the consumers most likely to be interested in your product, you can select different marketing tools for reaching each market.
Knowing your target market also helps you create effective marketing messages. A good message convinces the potential customer that your product solves a particular problem for them. However, the most important problem that your product resolves might be different for males and females, different age ranges, or even Dodgers and Yankees fans. Before you spend any money on a marketing campaign, you need to understand the details of your target market so that you can provide messages that are the most effective for each segment of your market.
Whatever type of business you are starting, posting a website is an absolute must. Consumers these days are more apt to run a quick internet search for a local restaurant than check the phone book, and more and more Americans are sporting smart phones that allow them to find any type of business on the go. Even businesses serving the smallest of markets benefit from the reasonable cost of hosting a website. In one west Texas town of 1200 people, the local motel increased its traffic by more than 30% just by setting up a basic website and adding the link to various hunting sites for free. The $10 per month hosting fee pays off in spades!
Of course, merely posting your site to the internet is not enough. In fact, posting a website without marketing it is like creating ad copy and keeping it in a desk drawer – if nobody knows about it, it might as well not exist! Search engine optimization methods are not difficult to implement, but they do take time to pay off. Incorporate SEO into every marketing plan and be sure to stay on top of the efforts. Also be sure to include the website address on every piece of marketing material from business cards to print ads.
In addition to launching a website, your marketing plan must incorporate methods from each of the five basic elements in classic marketing theory – advertising, promotion, public relations, personal selling, and direct marketing. Many new entrepreneurs are familiar with one or two of these elements and so focus all of their marketing efforts there. Unfortunately, they completely miss out on opportunities to expand the customer base through the use of other elements. For the most complete and effective marketing mix, consider how aspects of each element can contribute to reaching your best targets and help build your brand. Each of the marketing elements includes a variety of methods for getting your message out. While not all methods will be right for your business, there will be some from each element that will be effective and should be included in your marketing efforts.