Learning to run a successful business is much like learning any new thing for the very first time. No one can expect to set up a successful business without first getting their basics right. Sure, you may have a great idea, a strong business plan and may even be backed by a venture capital firm, but if you do not understand the proper method of sustaining or managing a business, then your new venture might potentially be heading for a tragic and untimely end.
To be good at anything, you always have to master your basics. Take learning an instrument like a guitar for instance. You just can’t pick it up and expect to start playing it like Ed Sheeran. You first have to learn each note on the guitar, then move on to the chords and then finally learn how to strum the strings to create truly harmonious music.
In this very same way, any entrepreneur who hopes to launch, grow and develop a successful business venture has to have his basics down pat. According to data given by the Small Business Association (SBA), about one-fifth of business startups fail in the first year itself. So if you do not want your business to be one of them, then here are the top 5 things you need to understand so as to prevent your business from ending up in failure.
1. Need of a dedicated and motivated team (25%):
Managing a newly-launched business is by no means an easy task for even the smartest and most business-savvy entrepreneur. A lot of time and effort goes into every aspect of running the business and a single person or even a small team is not sufficient to handle all the work.
Quirky, a well-known invention platform in New York is a good example of a startup that failed to stay in operations only because they did not have a strong team needed to manage the manufacturing, engineering, and retailing processes.
Despite having a great idea for a developing a crowdfunding platform for inventors, the idea could not take off because the company did not have a dedicated team to manage the many business activities.
So in order to sustain the startup over a long-term, the entrepreneur needs to hire a team capable of handling some of the everyday operations so that he does not find himself overwhelmed with too many projects. As the famous author Helen Keller once said, “Alone we can do so little; together we can do so much.”
2. The product needs to be priced well (20%):
Careful thought needs to be put into the pricing of the product or service being offered by the new startup. After all, any startup would have needed financing from bank loans or venture funding firms for the initial setup. It is only through selling the product or service at a substantial profit will the money be able to be recovered in order to pay back the loans.
Many startups try to break into the market by offering their products at a very low price initially. However, unless they have enough financial backing to recover the losses that they are sure to incur at the beginning, they will have a hard time staying in business.
It’s best not to use this type of pricing strategy if you plan on launching a business. Instead, it would be far better for you to price for the product based on the value that your product or service is able to offer your customers. In the words of businessman and investment expert Warren Buffett – “Price is what you pay. Value is what you get.”
3. An effective marketing plan (25%):
Even the most well-thought-out business idea will not help your startup succeed if you do not market it well. No one is going to purchase your product or service if they have not heard about it or what it can do for them. It is only by marketing the product effectively will you be able to communicate the benefits of your products to your audience.
Boo.com was one such example of a company that could have done very well if they used the right marketing techniques or targeted the correct market. The company had a great a business plan, but because they did not have enough support in targeting the right market, they failed to stay in operations.
This just goes to show that having an effective marketing plan can make all the difference in helping you improve sales and increase the awareness of your brand. In this digital marketing era, an effective marketing strategy needs to be present for a business to reach its target audience.
Thus, you have to ensure that you have some ironclad marketing techniques that encompass social media, video, website (SEO) and online content marketing to help you sell whatever your business is offering.
4. Customer satisfaction levels should be high (15%):
To gain a lot of customers, a startup needs to offer people a product/service that is truly useful and which helps solve their problem in some way. Once a lot of customers start pouring in, the entrepreneur needs to find ways to provide them with timely support if the need arises.
Pippin Williamson, a WordPress Developer who had founded Pippin’s Plugin’s made the mistake of trying to manage his customer queries and support requests all by himself. Thus, he had to work late nights trying to fix all the errors raised by his clients and ensure customer satisfaction.
This incident made Pippin realize the importance of customer support and that is when he decided to hire a support team in order to save his business. He had also faced many other challenges in business but he kept learning from each mistake. He believed that “Just because you fail doesn’t mean that you are a failure. It means that one thing that you attempted failed.”
Every startup owner should understand that failure at some point is inevitable and it’s difficult to please all clients, but one should not give up so easily. Losing clients is not always the end, as the entrepreneur can always try and find creative ways to win them back.
5. Passion is essential for success (15%):
When you are passionate about what you are doing, you will not give up on it, no matter what obstacles may come your way. While many entrepreneurs are usually passionate about the startups they have launched, the excitement and enthusiasm they had felt in the beginning tend to fizzle out after they come across a few setbacks and challenges in their business.
Every entrepreneur needs to maintain the same passion and determination they had while setting up the business and prevent that ingenious spark from dying out the moment a few problems arise. Renowned singer and rock artist, Jon Bon Jovi, probably said it best – “Nothing is as important as passion. No matter what you want to do with your life, be passionate.”
Facing risks and challenges is part of being an entrepreneur. While this may be very difficult during intensely problematic times, instead of just giving up, its best to go back to the beginning and understand why you started the business in the first place.
Remember what made you passionate about starting your business. What drove you to begin your startup. When you try and recall all this, you will find it a bit easier to press on and overcome any obstacles that may arise.
As the famous saying by Aristotle goes – “Well begun is half done”. So if you have made up your mind to start your own business, then first focus on understanding the basics that we have discussed in this article. Once you have done that, the rest will come naturally.
Do you know any more things that entrepreneurs should understand in order to succeed? Share your thoughts with us in the comments.