Anyone can start a business, but that doesn’t mean the business will be successful. Building a good idea into a profitable venture requires more than hard work. Let’s look at three key factors that predict the success of an enterprise.
A Strong Business Model
To transform your idea into a successful company, you need to start with a strong business model. UpCounsel has a good list of tips on how to create one. A good, strong business model reflects the vision that is driving the business as well as the practical components being used to build it. A well-constructed business model will align with current business trends and map the company’s future path. Even if you already have a business model in place, you can always make improvements. Review your current model, identify its weaknesses and put action plans into motion to make adjustments.
Cashflow
Cash is King (or Queen). It’s often said that more than half of new businesses fail during the first year. According to the Small Business Association (SBA) states that 30% of new businesses fail during the first two years of being open, 50% during the first five years, and 66% during the first 10. One of the biggest reasons for failure? Cash flow problems. It is important to have a good reserve of cash, know and control expenses, and grow sustainably by protecting – rather than reinvesting – profits from Day One.
Ability to Respond to a Crisis
For a small business, a little mistake can have a huge impact. For example, you might create a social media post that goes wrong. Suppose people have a negative reaction to something you thought was positive. In these circumstances, how you deal with the problem could make or break your whole venture. According to the Ivey Business Journal, smaller companies, especially startups, must have crisis management plans already in place to handle such situations. Consider it insurance to prevent the potential losses a critical miscalculation could cause your company.
Be aware that a crisis may emerge from an external source, too – everything from your website getting hacked to a natural disaster. While you can’t plan for every possibility, the more you weave “what-if” and “plan-b” thinking into your planning, the better prepared you will likely be.
Every step of building a business plays a critical role in its success. An entrepreneur needs to know what is happening in the organization, identify problem areas, and take action to fix any weaknesses. That’s crucial to business success.
If you aren’t sure where to start or what will have the greatest positive impact for the least effort, we can help. Check out our bookkeeping and consulting services today!