How to be successful in business?
Often the simplest changes can help you succeed in business. If you want your business to succeed, forget about searching for secrets, and focus on the following simple strategies.
Business Tip: To protect yourself, you have to choose the right business entity.
What makes a business successful?
Understand where your customers are coming from.
Understanding where your customers are coming from gives you clarity. Companies with a clear understanding of customer acquisition are in control. Successful businesses always seek to understand how customers find out about them. Asking a simple question such as “How did you hear about us?” can provide you with great insight.
It is insufficient to know how you acquired your last few customers. One of the keys to building a successful business is to understand where your customers come from. The process is simple. You should be systematic about this and ask each customer. Make it part of your business culture to know. When you ask, “How did you find us?” you will learn whether it was word-of-mouth, email, search engine, advertising, a trade show, a mailer, or social media.
Understanding where your customers are coming from enables you to start scaling your business. It empowers you because it tells you what works and what doesn’t. Do more of what works and less of what is ineffective. Businesses that are more likely to succeed can tell you their most effective customer acquisition channels. Key Performance Indicators such as customer acquisition channels are essential to understanding and grow your business.
1. Visualize business success
Do you see your business successful? You hear people talk about their dreams, but I’m not too fond of that word in this context. I agree that it is good to have dreams, but don’t confuse dreams with visualizing business success. When you are visualizing success, you are doing more than daydreaming. You are actually thinking about ways to get there. Dreaming is passive, while visualizing is active. Picture what it would look like to reach your next goal. Do you want to get 100 new clients in the next six months? What would your business look like with 100 new clients? How would it impact the way you do business? How many people would you need to hire? Would you need to manage your company differently? Will you need more capital? Visualize your goals and think through possible scenarios.
Use the following steps to visualize business success:
- Picture exactly what you want. Be specific. If you are not clear about your goals, you will not get there.
- See what it will look like. Associate your goal with an image. It could be a group of new customers or an improved version of an application. Whatever it is, associate it with an image.
- Visualize daily. Repetition makes it more real.
2. Strive for optimal instead of maximum performance
How to run a successful business?
Today the average passenger car engine is built to last at least 200,000, running at optimum performance. A NASCAR engine that is run at maximum performance must be rebuilt after each race. The biggest problem with running your business at maximum performance is that it is unsustainable. You will burn yourself and your staff out.
An optimally run business will outperform a business that is running at maximum performance for several reasons:
- If you are in it for the long haul, you want an optimally run business. Getting the most out of yourself and your team sounds great, but in reality, it will burn out you and your staff before you have time to succeed. You will resent your business, and your employees will jump ship.
- It would help if you only grow your business at a rate that enables you to manage and finance your growth.
- You can expect people to work 14-hour days, but you won’t get the 14-hours worth of work. It is fine to pull an all-nighter once in a while, but it is not sustainable.
- Just because you can sell 100 more new customers, it doesn’t mean that you can provide quality service. It is tempting to rev up your sales efforts, but you could harm your reputation in the long term.
- Don’t grow your team faster than you can train them.
3. Build your business to last
How to start a successful business?
Hopefully, you will sell your business one day and retire rich. – Reality check. Only about 1 out of 10 businesses are ever sold. – But, even if you sell your business one day, build it as if you would own it forever. Many businesses are started with a passion for a product or industry or the idea of entrepreneurship.
Here are a few key points to building a business that lasts:
- Be patient. To have patience is one of the rarest advice in American business. As the third-generation CEO of the German company, Mennekes stated: “sometimes it is good if you stick to your core competence, and then one day, if you have the patience, there is a topic where you can suddenly jump on.”
- Always chose security over growth. As Ulf Poppel, third-generation managing director of BSW, a 400-employee company, said: “If we could decide between 5 percent growth and 100 percent security, we would choose security.”
- Narrow your horizons. Always choose depth over breadth. Minimize competition by narrowing your business niche. Always strive to become an absolute expert in your field. When you are the best in your field, it is unlikely that anyone will beat you. I know everyone tells you that they are the best in their field, but are they really?
- Focus on markets that are either growing or stable. Never enter a shrinking market even if it is attractive as a short-term prospect.
- Go beyond your geographical area. If you can expand to the next city, that is good. If you can go global, that is great.
- Continually innovate.
- Do more for your customers than your competition is willing to do. Going the extra mile is what builds brands. For instance, a 10-year old girl asked people to help her find her lost LG E400 phone; the word spread through social media. When the news reached LG, the company surprised her with a brand-new LG Swift L3II.
- Manage your business as if you had expected it to live forever.
4. Engage with your target market
The most successful brands are great at building relationships with their audience. Focus on building relationships before you are selling. If you can manage to build an authentic relationship with your market, they will want to buy from you. People want to buy things from people they know and trust.
Find out where your customers are and meet them there. You can do this through events, forums, and social networks. You could post articles on websites they frequent. Or become part of the conversation on social networks. For example, you can search Twitter for topics relevant to your market and engage with people.
Engagement takes time. It doesn’t happen overnight. You are building relationships. As your participation increases, you grow the number of people who know and trust you, and if you have the right product for them, they will buy.
Here is how to define your target market:
- Who are your best customers?
- Who are your competitors’ customers? If your business is brand new and you don’t have any customers, study your competition. Who are your competitors targeting? Are there markets your competitors are not going after? Sometimes it is better to find an underserved niche than to take on your competitors head-on.
- List the benefits of your service. If you are building websites for small businesses, make a list of businesses that are currently underserved. Your goal here is to find small niches with a laser focus.
- Be very specific about your target demographics. Your B2C customer demographics should include:
- Family status
- For B2C customers also consider psychographics such as:
- Your B2B customer profile should include:
- Number of employees
- Who are the decision-makers?
- Can you attract enough customers to build a business?
5. Succeed in business by learning from your competition
Businesses that learn from the competition are winning. Everybody has competition. If you haven’t found yours, that means that you haven’t looked hard enough. Don’t get turned off by it. Learn from it.
Think of your competitors as your teachers.
It is your job to discover what your competitors do and why they are doing it. Of course, the key is not to copy but to improve.
There are several valuable things you can learn from competitors to help you succeed in business:
- Pricing – Setting the right price is hard. There is no real science to it. It is more like a mesh of art and science. You can learn so much from your competitors’ pricing structure. If you are new, it gives you a quick snapshot of how much businesses charge for comparable products or services. Such insight can save you a lot of time.
- Marketing – Find out how they market their services. Monitor social networks, sign up for their email lists, check out where and how they advertise. Do they offer webinars? Do they attend tradeshows and seminars?
- Customer satisfaction – Customers are quick to share the good, bad, and ugly. You can monitor social networks, forums, search engines, review sites, etc. to get a good idea of how customers speak of your competition. If customers complain, it is your opportunity to become the alternative. If customers love them, you have to up your game to make a mark.
- Errors – Every company makes errors. They give you opportunities to learn and hopefully avoid them with your own business.
6. Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV)
CAC tells you how much it costs to acquire a new customer. CAC is essentially your cost of sales and marketing. If you don’t understand this number, you can’t justify spending on sales and marketing. CLV is the profit attributed to the entire future relationship with a customer.
We use the CAC and CLV in conjunction. For example, if your CLV is $300 per customer and your CAC is $600, your business is in trouble because you are spending twice as much as you earn. Your CAC must be less than your CLV if you want to stay in business. In the above scenario, you either have to increase your CLV or decrease your CAC.
Understanding the relationship between your CAC and CLV is crucial. Both are real numbers with an actual dollar value you can measure. The numbers may change over time, and as they do, you will be able to make the necessary adjustments.
7. Emailing your prospects and your current and past customers
Email marketing offers a simple and cost-effective way to communicate, yet most businesses continue to ignore it. Sending one or two emails here and there is not enough. Proper email marketing is about staying in touch. The most effective tool to stay connected is email. You should email your lists at least once a month. Depending on your industry or your business’s seasonality, you might need to adjust the frequency, but the key is to email regularly.
You should email at least three groups: your prospects, your current customers, and your past customers. Your prospects may not yet be ready to become customers, but you must continue to engage them. Educate them about your products or services, provide customer testimonials. Think less about selling and more about providing value through guidance, training, and education. As a direct result of email marketing, your prospects will view you as an authority instead of someone who is simply trying to sell something. Your current customers may be interested in a new product or service you offer. You can also ask their feedback to improve a product or service.
Email your past customers to let them know what’s new. Have you introduced a new product or service? Have you made improvements? Offer incentives to encourage them to return or to refer others. Maintaining contact through regular emails with your past customers gives you a chance to stay top of mind when they are ready to buy again.
8. Ask for feedback to help you succeed in business
Some businesses are concerned about asking for feedback because they are afraid of negative feedback. In business, no news is never good news. The reality is that your business will benefit more from negative feedback than no feedback. Feedback also gives an outsider’s point of view. It gives you a chance to understand what your customers like and don’t like. It helps you to make adjustments. Asking for feedback allows your customers to feel important. We all want to think that our opinions matter and your customers are no exceptions. Think of customer feedback as free advice you get from those that matter the most, your customers.
Any business that wants to succeed should strive to improve continuously. When you ask for feedback, you show that you are willing to turn a wrong into a right. We often hear customers rave about companies that managed to turn a negative experience into a positive one.
Some frequently asked customer feedback questions are:
- Would you refer us to your friends?
- What did you like the most about our product/service?
- What did you like the least about working with our company?
Asking for feedback will make you a better entrepreneur.
Social media is here to stay, and if you don’t use it, your competitors will. The question is not “Should I use social media?” it is, “What social media platform should I use?” If you haven’t used social media, it can be overwhelming at first. The key is to take it one step at a time. Don’t try to be on all social platforms. Instead, focus on one or two to start. Also, keep in mind that your social strategy will be different if you are a B2C business than if you are a B2B business. For example, while Facebook is an excellent platform for B2C brands, LinkedIn is generally more effective for B2B companies.
One of the most common excuses for the lack of social media is time. You can accomplish a lot in a little time. In a few minutes, you could post a company update on Facebook or share a press release on LinkedIn.
Social media empowers you to grow your focus of influence. It helps you introduce new products and services. Social media can be your tool to solicit customer feedback. There is nothing magical about social media. It is simply a tool you can use every day to improve your business and make you more competitive. It will provide you with opportunities to stay connected and in front of your prospects and current and past customers.
10. Cash flow and business success
Even successful businesses go bankrupt. When you run out of money, your business dies. It’s that simple. With cash in the bank, your business lives for another day. Managing cash is one of the most difficult tasks entrepreneurs deal with. You spend too much; you run out of money. You spend too little; you miss growth opportunities.
There are many ways to increase cash in your business:
- Expect the worst. The best businesses are conservative with cash, even during good times. Even if things are going well for your business, expect rainy days to come.
- Cut costs. Yes, you can always cut costs. Renegotiate your office rent or find less expensive options. Reduce your energy costs. There are many ways your business can cut costs.
- Don’t spend on anything that would be “nice” to have. Only spend on things that grow your revenue or must-have items. If it would be nice to have a larger office space, optimize your current workspace before spending more on rent.
- Sell unused or unneeded assets.
- If you are a service business, take large upfront payments for projects. A 50% down payment should be the smallest amount to ask for to start on a project.
- If you are a product business, sell excess inventory.
- Bill your customers early and often. Don’t wait. The sooner you send an invoice, the sooner you get paid—fire customers who pay late.
- Keep your cash in interest-earning accounts.
- Ask for the net-10-30-90 payment terms of your vendors.
- Offer incentives for early payment.
- Hire a collections agency or freelancer to help you collect for old accounts receivable.
- Introduce subscription or recurring revenue models to your business.
- Pre-sell products or services.
- Buy used instead of new equipment.
- Barter for products or services.
- Get a business line of credit. Only use it in case of an emergency.