Most people try to complicate business, often academics and so called “experts” who haven’t yet built a successful business themselves. The truth is that the core principles of a successful business are quite simple. There are 5 key Principles I have detailed below. These principles are not a guide or a case of having most of them is good enough. Every core principle is both straight forward and simultaneously critical to any business success. I will then expand a further 12 ideas for greater business success for a total of 17 Bright Ideas. A huge thanks to Mat Jacobson – founder of the Ducere Centre of Management (www.ducere.co) for this fantastic list of 17 Bright Ideas To Be More Successful In Business
Remember that business is actually quite simple – Despite even top MBA schools teaching highly complex theories, they typically ignore what a business really is. Adhere to the keep it simple rule. If you can’t simply and easily see how these principles apply to your business idea, find a new idea.
Provide a product that customers want – This can be tested by actual sales, focus groups, market research. But quite simply the basis of your business is a product that customers are willing to spend money on. Key consideration: remember that what you may believe is a good idea, is different to the question, are customers willing to buy it.
Make sure that Principle 2 (a product customers want) is at a price they are willing to pay – Millions of customers are prepared to but a cup of coffee, but at a cost of a few dollars. If you wanted to charge $35 a coffee, chances are you have a product customers want but a price that no-body will pay.
Make sure customers can find your product – This can be through distribution into existing stores, traditional advertising, on-line ,marketing, promotional activities. Whatever medium works provided it actually leads customers to purchase your product.
Make a profit – All of the above must be done for a price that is less than the sale price of the product. Sounds simple right. A pencil that costs you 50c to manufacture that you can retail for $1 sounds like a profitable business, and it is provided that the 50c is a true cost. Does that include, all overheads, marketing, leasing… A the end of the day the product must sell for higher than all the costs of acquiring and selling the product, if not you don’t have a business.
Now that the basis are met, how can we get a bit more out of your business – The above 5 principles may sound too simple, but the truth is they are that simple. A common business mistake is not seeing the forrest from the trees. If every business decision you make for the rest of your career refers back to points 1-5, you will have a very successful career. Its easy to buy into hype, speculation and fantasies about big rewards in the future. Social media is a classic example. This is an incredibly useful tool for many businesses, and then many more jump on the bandwagon. Does a hardware store really need its own facebook page, how much do you care about what your local hardware store is posting on facebook today? They would be better off investing the same money into a saturday afternoon sausage sizzle.
Stay focussed on the key things that matter by getting a successful business mentor – Not a business coach advertising in the local paper (most of these have not actually had any great personal business success) but a real business person who has succeeded. They will not pander or try to please you. They will be a great sounding board and tell it to you how it is. Reach out and call someone who has succeeded, you will be surprised at how many people are willing to help and provide valuable advice.
Get out of your comfort zone – Learn as much as yo can from as many sources as possible. That may include reading books, formal education and best of all, experiencing other successful businesses.
The three most important formulas in business – ROI, ROI, & ROI – When looking at a marketing campaign, a new logistics warehouse, upgraded HR systems. Don’t lose sight of the fundamentals. Every decision should be based around the question, will this provide a return on my investment.
Engaging the Customer Want – The psychology behind purchasing is very powerful. Yes customers need toothbrushes, but do they need YOUR toothbrush. Delve deeply into the customer experience and expectation. A toothbrush purchase could be based around price, quality (it won’t break after 1 week), effectiveness (cleans better than the competition) etc. Understanding what drives the purchasing patterns of consumers and where your product fits in is critical.
Getting pricing right – Pricing typically falls into two camps, price sensitive competition or high value product at a premium price. Lets look again at a coffee vendor. If your goal was very cheap, poor quality coffee, there will no doubt be a market for people willing to spend $1 for a McDonalds instant coffee. Mass market low cost offerings are the formula for many successful businesses but be wary, your on a slippery road. You will have no customer loyalty, will need massive volumes to generate enough revenues and there will always be someone out there willing to offer a cheaper product. The coffee ingredients costs cents, what happens if your neighbour offers an instant coffee for 25c? the answer is you have no business. In my experience people would be more willing to pay $4 for a coffee if it is the best coffee in town, with a good atmosphere. Your selling an experience customers want, not a commodity offered by the lowest seller.
Marketing ROI – Too often the approach to marketing is a scatter gun. A bit of exposure in a host of mediums. That is fine to try various methods of getting the product out to the market, but its equally important to monitor the effectiveness of each of these. Again, its all about the ROI.
The key principles of business are everyones business – All staff in an organisation should be trained and understand the key principles. One of the reasons for low productivity isn’t because staff are playing solitaire or spending too much time chatting (of course this could also be an issue) but because staff are busily working on what they believe is an important priority but in fact isn’t part of the core fundamentals of business. The more all staff understand what is critical to business success, the more attuned they will be to ensuring time is spent on the things that matter most.
It’s a marathon not a sprint – There is always pressure between needing short term wins (you have to pay this months bills) and long term viability. But it pays to remember that you will likely be in business for decades. Maybe not the same business but in business, and the business community is small. Many shonky operators try to screw a customer for a short term win. But they are then left wondering months later why business is slow. Its because there reputation has caught up with them. There are countless scams that can be done if all you care about is today There is only one way to do business that lasts 30, 40 or even 50 years, that is to be honest, ethical and fair.
You can learn something from every person you meet – Some fat cats have the impression they are better than a lowly paid worker. Chances are firstly, you just had better opportunities than they did, secondly, if you take the time to speak to them and be genuinely interested in what they have to say, I guarantee you will be surprised at what you can learn.
Did I mention ROI?
All of the above is of no use, if all you can spare is the two minutes it took to read this and then your life goes back to a manic rush between meetings, emails, texts and phone calls. You need space to consider the above. Ideally on holidays or free time on the weekend to sit back and think uninterrupted. If not, even catching a train to work each day with the phone switched off and music turned on instead of driving will give your mind some time to think. Innovation and creativity comes at unexpected times.
- Mat Jacobson – founder of the Ducere Centre of Management (www.ducere.co)
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