There are keys to success that every single business – whether a start-up or a thriving enterprise – needs to master. If you can set your business up with these in mind, you’re half way to building a brilliant business, argues Jason Cunningham.
Know your business. The first thing I encourage all small business owners to do is to articulate your ‘why’ – the reason your business exists (and the real reason customers buy off you). Crucially, you need to communicate it to your key stakeholders: team members, clients, prospects and suppliers.
Then develop a long-term vision for the business – and share it with your team to paint a picture of the future that they can buy into and strive towards (and that your clients want to be a part of). Finally, set clear, measurable goals – shorter-term signposts that indicate you’re on track to achieve your vision (these also give you an excuse to celebrate your wins along the way). Ensure everyone understands their role, and how important it is to your overall success.
Master the 4 pillars of business success. The 4 pillars of business success – your People, your Processes, your Customers, and your Financials – are the foundations on which any successful business is built. The first three pillars drive your financials; your financial success depends on your ability to fully understand your business, your industry, your competitors and your target market, and to attract (and get the most out of) outstanding team members. Without being crystal clear on the first three pillars, your financials will just be a guesstimate.
Start at the end. Even if you don’t plan to sell your business, build it like you’re going to. The elements that create a business people want to buy – strong cash flow, great profitability, amazing people, loyal customers, solid systems and processes, and a business that works just as well without the owner – are also the keys to your success.
Plan for success. A 1-page business plan each year will help you articulate your objectives, and what you need to do to get there. This ‘activity compass’ becomes especially valuable when owners inevitably get caught up in the day to day doing of your business in the tricky start-up phase.
The cornerstone of financial success is a budget or cash flow planner. These tools enable you to manage incomings and outgoings to ensure you can meet future expenditure needs. I advocate you budget like a big business and use bottom-up budgeting where you set a profit target and work backwards from that to determine required revenue and expenses.
Focus on the things that matter. Many business owners take a scattergun approach, spreading their limited resources too thin and overcommitting to inefficient activities. Consequently, they wind up being beige. Focus on what you do best, and what is critical to the success of your business – and be awesome at it. Determine your key drivers of success – and smash them. Avoid being sucked into the ‘doing’ vortex and making reactionary rather than strategic decisions.
Stay on track. The most common mistake I see from small business owners is a lack of information. They have the best of intentions, are fantastic at what they do, and are passionate about creating something amazing. But without up-to-date information on cash flow, sales, margins, breakeven points, your most profitable products / services, and the KPIs (Key Performance Indicators) you need to reach to achieve your strategic goals, you’re threatening your success.
It’s critical to regularly measure performance against your KPIs so you can stay on track, and take corrective action where necessary. Use cloud-based accounting software to build a business dashboard so you can see at a glance how you’re tracking, no matter where you are in the world.
Operate in your genius. Start-up owners especially need to focus on your strengths – both as a business owner, and the business itself – so you can maximise your effectiveness and avoid trying to do it all yourself. This is linked to having the right people in place, but a critical success factor is surrounding yourself with expert advisers who can:
- give you the clarity, confidence and direction to take the required action to achieve your goals, and
- hold you accountable to ensure you execute the required actions at the right time, or tweak the strategy as circumstances change (if you don’t have a business advisor, use your accountant, business partner, or even buddy up with another like-minded business owner whose opinion you trust).
Don’t be all things to all people. Sometimes you need to say ‘no’ to a customer. This can be difficult for start-ups (even for established businesses who still have that ‘start-up’ mindset); but beyond a certain point, chasing every dollar will be counterproductive to your long term strategic growth. You need to focus on attracting and servicing your ideal clients, and develop products and services that best meet their needs in the most efficient and profitable manner.
Jason Cunningham is an author, keynote speaker, media commentator on Channel 10 and radio SEN1116 and co-founder of financial services firm The Practice. He helps business owners of all stages and sizes to grow their value and profits.