The likes of capital and having the necessary equipment are common key success factors in setting up a small business I know you’re familiar with to an extent. But the not very talked-about one’s or uncommon factors which as halted the growth of over 80% of small businesses is what I will focus on. So if that sounds like what you’ll be interested in, then stick around.
And make sure you do read no 4. Every word on that chapter is success factors for small business you don’t want to neglect. plus, you won’t find the information elsewhere.
Before we get into the success factors I have for you today, it’s essential you have done what I’m about to share with you below to run a successful business.
As an entrepreneur or an aspiring entrepreneur, it’s mandatory for you to have identified your starving crowd before anything else.
here’s a quick short story to make you digest my point…
Gary Halbert (one of the greatest copywriters of all time) used to ask:
“If you and I both owned a hamburger stand and we were in a contest to see who would sell the most hamburgers, what advantages would you most like to have on your side?”
After asking he would receive a slew of different answers:
Some people would want the best quality of meat to make the patties out of…
Others would want sesame seed buns…
Some would ask for the best location…
And, of course, some people would say they wanted the lowest prices.
Gary would say they could have every single advantage that they had asked for…
If he could have just ONE SINGLE ADVANTAGE.
What advantage did Gary want?
Gary wanted “A STARVING CROWD!”
See none of the rest of those advantages matters very much if you don’t have a crowd of hungry people to buy your hamburgers.
And, if you have a crowd of starving people in front of you…
They’ll likely buy your burgers with or without a sesame seed bun or whether you have the lowest prices.
They are hungry and you have burgers!
In essence, all of the factors I will be showing you are secondary. And will be worth very little if not less – when you don’t have a starving crowd waiting to be fed.
And that’s the idea of starting a profitable business. You find a product people really, really want; and then build a business around it by making it available at the right time, right place, right form and in the right quantity and quality.
Sounds simple but it’s not.
So just as a reminder, this article on the success factors in setting up a small business on your own; And it will be centred on those important things you need to consider carefully. Plus, you also want to work on them to increase your chances of setting up a successful business
Therefore without any further ado…
13 Success Factors For Successful Small businesses.
1. Pick a market niche.
My very first advice to individuals who want to start up a successful small business is to pick or choose a niche
According to businessdictionary.com
A market niche is a small but profitable segment of a market suitable for focused attention by a marketer .
Market niches do not exist by themselves but are created by identifying needs or wants that are not being addressed by competitors, and by offering products that satisfy them
Now a market niche is basically a subset of a small version of a broad market.
Let’s say you intend to launch a business in the health niche.
Here are some of the niches under health
- Digestive health / healthy gut.
- Weight loss.
- Back and neck pain.
- Hair loss.
- and many more.
Based on your knowledge and experience, let’s say you then decided to pick and focus on those with hair loss problem. If you do that, You’ve successfully picked a niche out of the many out there.
In other words, what I been indirectly pointing to is that you identify your own target audience.
They are those people you want to satisfy with your products or services.
And they can also be called your potential customers. Because they haven’t started patronizing you YET!.
- Creating a niche helps you stand a better chance of creating and having authority in the market
- Plus, you can have other closely related niches added to your business as you grow by getting good employees using the method of recruitment to know who can do the job.
Anytime you think about your business, how do you feel?
perhaps you are on a date and a thing or two from your business crossed your mind – how do you respond to that?
Would you like to talk about the idea?
It’s bad enough when someone accepts a job he/she does not like just to survive. But to actually start the business yourself is worse; simply outrageous. Therefore another important small business success factor is your passion for your business.
Passion is any great, strong, powerful, emotional feeling and that is what your small business needs to be successful. You must love what you do to make sure it’s the right business.
Starting a business without the drive to keep keeping on is like loving the wrong partner. It will crash in due time and leave you in disappointment.
3. Conduct product viability.
Like I stated earlier, as an entrepreneur, it’s recommended to have identified a need before taking time to produce a product or service to satisfy those needs.
Someone saw the need to make communication easier that’s why the mobile phone was introduced, the need for humans to move faster from one place to another prompted the creation of automobiles.
The kicker here for you are…
That product or service you intend to build your small business around…
Firstly, will it meet a need or want for which there are loads of customers who will be willing and able to purchase and use it for the same reason you created it?
Secondly, what are those unique feature you intend to add to your product – that will make it more desirable and better than what is already in the market?
Conduct a research on the service or product you intend to give in exchange for money to know:
- If it’s really what your target audience want and are ready to pay for.
- Uniqueness or additional benefit: Something that will make your target audience leave their current sellers for you.
- Profitability. Hope the product is capable of fetching you good returns of investment.
Carefully analyze the questions above and answer them as they are key success factors to start a business.
4. Business location
In simple words, your location is the geographical area you intend to site your small business. This is to ensure your target audience can get access to your product when they need it.
While working on your business location, make sure you consider all of the following.
Your competitors are those who are in the same line of business as you. They are so those targeting the same target audience as you.
But the ones you should be concerned with are your major competitors. And they are none other than those small business owners like you, who not just seek to capture the awareness of your target audience and satisfy them…
But also had the guts to site and run their business in the same area you intend to run yours.
So before choosing a business location or a place to site your business consider the number of business owners running similar businesses.
Remember we’re looking for a starving crowd here, make sure they’re not more than two.
Another one of the key success factors for small business owners while seeking a location, shop or store is…
Analyse the area to ensure your prices can compete with existing one from those running a similar business.
But no matter what, never set your price higher below the cost incurred in the product or service.
While penetration pricing strategy works well in getting clients to your product or service, it shouldn’t be adopted at a loss.
Because the essence of starting a business is towards profit maximization. – Agabi Godwin .
When your competitors are charging $20 for a product or service and you know yours is worth more than that price…
…you can either charge $15 for yours on a short term; Or embrace the concept of product positioning to your ideal target audience.
Furthermore, there’s an alternative to reducing the prices of your goods and services like a cooperate desperate beggar when you need sales.
Always remember this:
People judge the price of a product or service based on the value or benefit they tend to derive from it.
Therefore, your best bet so selling your product or service for what it’s worth is by boosting the value of the product to justify its price tag.
People are selfish; and will only buy when they feel you’re the one selling at that price.
For example, I remember buying a course because the seller promised free lifetime access to consult him anytime in relation to starting an online business /make money online.
While going through the almost endless benefit of that course, the urge to buy rose to 100% after seeing the free access to lifetime consultation on the online business part.
I was like wow! So this dude will actually be at my beck and call forever?
But guess what! I am yet to even consult him till date.
Selfishness is in everybody and that’s why we buy.
If that wasn’t the case, why do you think people buy cars and gadgets because it comes with a 100% free repair guarantee for a year. And still, they don’t use it.
Recently I bought another course because the seller promised a 50% discount on his forthcoming course on copywriting.
Isn’t that selfish?
Therefore, not until you discover how to boost your product value before your target audience and trigger that selfishness inside of them, you’ll always fall back to low prices… which won’t ensure your long term success.
And that leads to me to another success factor you must consider while choosing your business location which is…
- Profile of people living in your the geographical area.
Are you targeting high, middle or low-income earners?
- Low – middle-income earners
Why? you may wonder:
You want them to be not so rich – as to be able to afford their own personal computers and internet connections…
…but not so poor as not to be able to afford your internet service.
Hope you got the idea? Good!
Lastly on success factors for small business while seeking a business location is…
- The number of individuals living or gracing that area
For example, in relation to starting an internet café business, this is very important because the more populated an area is, the more likely you will make sales.
Depending on the small business you intend to start up, just make sure you have it sited at a place populated or highly graced by your target audience.
For a restaurant business, a very busy area will be best. E.g shopping malls, busy downtowns etc.
Finally, keep in mind parking space and security. These things matter. You know, everything that ensures your customers are comfortable should not be underestimated.
5. Level of experience and education
Experience is having or having had great skills and knowledge about something. And do you know why it is one of the most important key success factors in setting up a small business ?
According to research, it is easier for an educated individual to fail at business than an experienced individual.
Don’t get me wrong, education is also a success factor, but it’s secondary to experience.
Therefore, while looking to start a small business you should have either experience or education. Starting without any is a suicide mission.
However, in a situation whereby you’ve got zero education and experience, and you want to run a successful small business…
- Firstly, contact someone who’s already flourishing in that line of business if any and get a decent training on it. For example, if you are interested in home based sewing or the barbershop business, it is advisable you contact a good barber and master how to cut, dress, groom, style and shave men’s and boys’ hair or beard.
- Secondly, hire qualified employees. It’s as simple as that.
At the end, it’s your call…
But let’s say I’m looking for a marketer… and drop you a marketing degree holder and a 7-year experienced marketer – all other things being equal.
I will pick the latter. For me, its experience overall. But like I said earlier, it’s your call.
One problem all business owners face is getting the right people to work for them.
The people who work for you will play a huge role in the success of your business.
Remember the wrong material can’t be used to produce the right product.
In essence, the wrong employees will only decline your business instead of moving it in the right direction.
Therefore, if you must get people to help you or work for you as a small business owner, adopt the appropriate way of recruitment.
Also, make sure from time to time you organize seminars or like a round table team talk to improve the team spirit, courage and also motivate them.
Your workers have to be in the right spirit and all motivated to really perform and it’s your duty to make that happen.
Lastly, know when to be a boss and a friend.
6. Business plan
A business plan can be described as a document which entails the goals and objectives of a business and way/means to achieving those objectives using available resources.
In my own opinion, a business plan is simply a guide that entails a business aims & objectives and strategies on how to go about achieving those aims and objectives.
However, your business plan must be specially drafted for your business; should remind you of your why and helps you achieve your business goals if or when adhered to.
The same goals you listed while starting the business in the first place.
That is that about that…
However, here’s a basic overview of areas your business plan should cover
- Executive Summary
- Company Overview and Description
- Market Analysis
- Business Offerings
- Marketing and Public Relations Strategies
- Financial Projection
7. Keep records (bookkeeping)
The importance of bookkeeping can’t be overemphasized in any business either big or small.
A small business pursuing success must keep records of all business activities.
With one of the most important being financial-related activities.
Below are some of the reasons you may want to keep records.
- Records help you know your income and expenses
- Helps you in planning – in terms of budgeting for future things needed to be done.
- It helps in controlling: A decent record play huge roles in a control system such as quality control, product control, inventory control etc.
- It also helps you keep tabs on debtors.
8. Customers satisfaction
I believe by living with the intention of starting a small business, you must have understood who your consumers really are… not forgetting you ought to have identified their want.
Peter Ferdinand Drucker , an Austrian-born American management consultant, educator, sees consumers as those who determine what a business is. They convert economic resources into wealth by their willingness to pay for a good or service.
Judging from the definition above, I believe that consumers (target audience) are one of the most important aspect of a business (big or small).
If you can’t satisfy them you’ll struggle with sales, and if you struggle with sales you won’t make a profit. And if you don’t make a profit then WHAT ELSE IS THERE?
An unsatisfied customer might lead to losing 10 individuals from patronizing you. That’s how a powerful a customer is… and therefore, should not be underestimated.
“Tomorrow morning, when you look in the mirror after you’ve gotten up, just write — put it in lipstick or whatever you want on the mirror — just put ‘delight, my customer,'”
“The phrase is not “satisfy my customer,”… “Any business that has delighted customers has a salesforce out there. You don’t have to pay them, you don’t see them, but they’re talking to people all the time.”
Don’t just satisfy your customers, delight them.” ~ Warren Buffet
Below are some of the ways to keep your customers satisfied and possibly delight them.
- Make sure your product or service is of high quality
- The cost of your products should be very affordable. (i didn’t say cheap, I said affordable)
- Offer discounts and unexpected freebies when necessary in other to wow them
- Engage in-home delivery if or when necessary
- Make those deliveries are the right time, right place, right quantity & quality and in the right form.
- Don’t increase your product price at the door of your customer. In situations where they may be an increase, inform them before the delivery.
- Provide information/tips on how to use and manage product for longevity and efficient use
Remember a satisfied customer will always come back which is good for your business.
So you want to Make sure you go extra miles to see that your customers are satisfied. It is a very key success factor.
9. Business Insurance.
Insurance is a means of indemnity against a future occurrence of an uncertain event.
Insurance for your business is very important.
Aside all efforts you have put into setting up your business, They are also foreseeable risks when running a business and also unpredictable one’s.
It’s therefore advisable you get a suitable premium insurance plan that protects your business.
10. Motivation and Determination.
Motivation is having that eagerness and willingness to do something without being told or forced to do it.
Determination is the ability to continue trying to achieve what you have decided to do even if it is difficult or stressful.
Motivation and determination are a must-have for you and your employees if you intend to start up a small business and make it succeed. Earlier, I laid emphasis on setting up a seminar to motivate your employees right? However, that’s only possible if you are highly motivated and determined yourself. Because you can’t give what you don’t have. if you are not motivated and determined yourself you cannot pass it on to others
Your motivation and determination to see that your business succeeds will be reflected in how fast you are at overcoming the obstacles that might get in the way, how you go about seeking information and how you act on opportunities.
11. Effective and efficient management
If you want to be a successful business owner (entrepreneur) you must definitely possess a good management skill.
After doing the needful by identifying your niche, getting a good location, resources, a well-structured business plan etc. your business then need to start functioning and once this is done, it will need to be well managed.
What took you months or perhaps years to start up can be destroyed in days. that’s how easy business will go if not well managed.
If you could score or be rated at least 80 /100 in planning, staffing, organizing, controlling, financing and influencing; (because these are keys to management functions) there’s a high chance you will be operating a successful small business.
The quality or state of being able to do something.
For example, abilities needed to start an internet café include
- IT or computing knowledge and skills,
- Ability to install software and do routine maintenance and repair
- Book-keeping and basic organization
- Familiarity with internet search engines and emails.
- Ability to teach /train clients in basic computing skills.
You may from your experience have very good computer knowledge and skill but miss out on the ability of bookkeeping and basic organization. That’s not having the ability to keep records, which is a key success factor for a small business.
Therefore, make sure you possess all the necessary abilities to see that your business succeeds before starting out full time.
Read Also: 16 lucrative sewing business ideas.
13. Maintain law and order.
Gather the necessary documents and make your business is in-line with the rules and regulation of guiding that country > state > city or even the geographical area you intend to run your business.
Laws differ from country to country as well as state to state, sometimes it boils to cities within a state. Therefore, you want to meet with the appropriate authorities to assist you with what you need to run a law-abiding business.
The essence of this is to avoid government sanctions.
- All mandatory factors you must consider before choosing a business location.
- The various stages consumers go through before buying a product (adoption process)
While they are other key success factors in setting up a small business which ARE important;
…you just have to carefully analyse your business, pick what you can handle, try it out and stick to it if works out for you.
Your commitment and attitude to your business are also key.
The quality of your product/service and how long you are willing and able to work in terms of hours per day and numbers of days in a week -all of these are key to starting a small business
what do you think it will happen if you can’t sell?
Therefore, in all you do strive to MAKE SALES…
…because without it, you’ll be frustrated and out of business in no time.
…that’s it from me.
I don’t know it all, so if there’s any success factor for small business owners you know is very effective, please feel free to share via the comment section.
Thanks for stopping by.