Search online, and you will find a host of business experts happily expounding on what constitutes a successful business. Most of the advice is along the same lines, and the same seven markers consistently appear. Success is measured by:-
- Quality products
- Loyal customer base
- Brand awareness
- Social contributions
- Employee satisfaction
We put these to the Garry Diver, Chairman and CEO of Stockport based Ultimedia, to find out his thoughts on what makes a successful business.
What constitutes a successful business ?
A successful business…
- Is measured By Profits
Nonsense. It’s all about cash flow! Don’t get me wrong, profit is nice, but cash flow is mandatory. Profit allows you to know what your margins are and it does have importance, but cash flow is everything.
If you’re in business for several years and not profitable, of course you are in trouble. So, profits will tell you whether your business is, in the round, generating income for you.
But, for small business owners and especially for new business start-ups, cash in and cash out is what needs to be maintained. Because without cash in, you can’t pay anyone, not least, yourself. Profit will come, but cash is your lifeblood, and being successful means being able to pay. Forget the profit worries for now, and concentrate on getting cash into your business.
- Delivers a high-quality product
No, again! You need to deliver a product appropriate to the expectations of the market that you’re in, and that is not necessarily the same thing. To use a silly example, if you go to the fish and chip shop you don’t care what paper it’s in. You don’t want it in a silk wrapping, and you don’t or shouldn’t care if it’s in the FT or the Mirror. You’re there for the fish and chips.
You want to deliver quality that’s appropriate for the price point and the expectations of the customer base that you are after. To use another example, you cannot deliver Jimmy Choo shoes at a Clarks price. And the people who by Jimmy Choo shoes want something that is better quality than a Clarks priced shoe. A Clarks customer wants value, a Jimmy Choo shoe customer wants a fashion statement.
What do your customers say they want and what do they need? Often it’s not the same thing, but the key is to be appropriate to your market and deliver to a promise. Understand your customers and give them what they need. Then you’re delivering them value.
- Has Loyal Customers
Critical … absolutely critical! It takes a long time to get a good customer and no time lose them if something goes wrong.
But, another word of caution: there is such a as thing as the customer you don’t want. I have been in a situation where I have had to fire customers because they have become too expensive to service. Maintaining that balance, is important. There are those that argue that superior service and always going out of your way to support the customer are important. And to some extent, that is a very important mindset to have. But you always need to stand back and say, “Am I making money?”
When I discovered a very large customer we had was a break-even-customer, but the aggravation factor for them to be a break-even-customer was far too high, I pulled the plug. Because it wasn’t doing anything for our bottom line to keep servicing them, no matter how big they were.
Loyalty comes at a price. You must commit to the customer for them to commit to you, which means you should be attuned to customer needs. Research, know and understand them. You have to get under the customer’s skin and understand who they are,
Not least, because one of the single biggest impediments of doing business with a company will be internal politics. I’ve bumped up against that several times too. You can have a good relationship with a customer and be delivering fantastic product and service. Then, out of the blue, a new head of department comes in. They want to make their mark, and some will do this by throwing everything out of the window, regardless of how good or bad it is, just so that they can do it their way and demonstrate their value to their employer.
Understand your customers and everything about them and the personalities you will be dealing with, then, and only then, can you turn them into loyal, profitable customers for you.
- Has Developed Brand awareness
I’m always conflicted by this point. In a small business, you don’t have the need for brand awareness in the same way that a generic company in a generic marketplace needs it. In all business, quite often, your clients are buying the individuals and the skills in your company.
I’d always say, it’s not about what you’ve got up on the wall, in terms of your name recognition, but rather, it’s all about the people who are delivering for you.
Brand has its place, but it’s less important than having the right people who can deliver to your customer’s needs. One mistake lots of people make is believing that your brand is your logo. It isn’t! It’s the promise of what you deliver, for your customers. Deliver on your promise and you will get recognition and brand awareness.
- Makes a Social Contribution
I’ve come across this, but I don’t think it’s in the purview of small business to try and make large charitable contributions. Instead, your contribution is to employ people. The more successful you can be and the more people you can employ, the better off society will be. In my view, the most important thing in the world is jobs. With a job goes self-respect, self-reliance and a degree of pride that you are looking after your loved ones. If you are running a large business, you have a budget to give to charity and that is important, but I know of very few big businesses that give more to charity than pay their executive team.
- Has longevity
I would say longevity is a by-product of being a good company, rather than a marker for business success. There was a fantastic company in the US that ran for nearly 200 years. It employed 25,000 people and was a major world brand. Up until recently. It’s called Kodak.
Longevity isn’t as important as being able to see how the market is shifting and responding to it. If that means closing the business and starting something new because the market has changed, then so be it.
- Has satisfied employees
This is an absolutely critical factor. Firstly, it’s your job as a business owner to deliver fair and reasonable employment. With that comes employee satisfaction. And you will need this! In larger organisations, it’s not as important, but in a smaller business it is vital. Your employees provide the critical supply of energy that a company needs to succeed.
To make a successful business, you need to plan and to be able to see your plan through. It’s about learning to take risks and not confusing your business’s success with your own success.
Most of all, remember, running a business is not a reality show. It takes time, hard work and commitment to your customers, your employees and you.
If you can be in profit, win loyal customers and be a recognised brand, then great. But your first responsibility is to pay your bills, pay your employees and to make sure you don’t run out of that all-important cash.