What Does a Successful Business Need?

Components that tell us what a successful business needs

WHAT is a successful business exactly? There’s a simple answer.

Here’s the definition you need to always keep in mind:

“A solid business is when you have a product or service that is so compelling, that people are excited enough to pay you for it, understand what it does, they understand it’s benefits.”

Your job is to solve a problem for your customer and to explain how your product does it clearly and convincingly.

These are the big picture components of a business and every entrepreneur needs to understand how they work together:

1. Researching and validating your business is first

Validating your business idea should be the bulk of your work at the early stage. Find as many ways to test the market to see if people would be willing and happy to pay for your product/service. This is very important, and saves you from building a business that nobody wants.

This involves identifying your target market, analyzing competitors, and understanding the needs and wants of your potential customers. You can start by conducting market research, which includes online surveys, focus groups, and interviews. This will help you determine if there is a demand for your product or service.

Additionally, you should conduct a SWOT analysis to identify your business’s strengths, weaknesses, opportunities, and threats. This analysis will help you develop a business plan that addresses potential challenges and opportunities.

2. Is your business doable given your circumstances?

Some businesses need a lot of time and money to start. Some don’t. Make sure your business idea is doable given your circumstances.

If you don’t have much or any capital available, don’t start a real estate business. It’s too expensive and chances are near zero you’ll find someone to invest in a newbie who thinks they can make money in realty.

Conversely, you could start a business doing social media marketing or email newsletters if you have a computer and some design skills, even if you don’t have a lot of money to invest at first.

If you have no background in product design or mass distribution, don’t start a company that makes coffee makers or lawn mowers, etc. It’s too expensive and complicated to design, develop and sell complicated products like this if you have no background in this area. 

Choose a business that you can accomplish. Maybe eventually you gain the expertise needed for more complicated business efforts.

As you assess whether your business idea is feasible given your circumstances, include evaluating your financial resources, time commitment, and skillset. You should also consider your personal and professional goals, as well as any potential barriers to success.

For example, if you’re starting a business while still working a full-time job, you’ll need to be able to balance both responsibilities. You may also need to consider the financial risks involved in starting a business, such as securing funding and managing cash flow.

3. Marketing and sales are hyper-essential

You’ll soon learn that marketing and sales are hyper-essential components of any successful business. Without them you will have nothing.

You’ll need to develop a marketing strategy that includes branding, advertising, and promotions. This involves identifying your target audience and tailoring your messaging to appeal to their needs and interests.

Additionally, you’ll need to develop a sales strategy that includes lead generation, prospecting, and closing deals. This involves identifying potential customers, building relationships, and establishing trust.

Here are some important questions to ask yourself regarding your marketing strategy:

• What is your marketing strategy?
• Who are your competitors?
• How are they doing things?
• Are they successful?
• What can we learn from them?
• Learn about all the ways you can market, to inform your spending and marketing decisions
• How much social media should you do? How can you do it well?
• Identify the customers pain. It must be there and you must be solving it.
• Your website: Do you have good quality photos and videos?
• Have you adequately and clearly described your value-adds to your customers?
• How does your website look and feel, how does it compare to industry leaders?
• Do you need more SEO work for Google to find you? Backlinks? Should you start a blog?
• How will you SELL to your customer? Do you know what a Sales Funnel is?

Develop a strategy to get customer acquainted with your product, then remove barriers so they can try it, and get the sale.

4. Organizing and Managing Finances

Managing finances is a critical aspect of running a successful business. You’ll need to develop a financial plan that includes forecasting revenue and expenses, managing cash flow, and securing funding.

You’ll also need to stay up-to-date on financial regulations and tax laws, such as registering your business and obtaining the necessary licenses and permits. It’s a good idea to work with a financial advisor or accountant to ensure you’re making informed decisions and staying compliant.

• Do you have enough capital to get through at least 12 months?
• What happens if you run out? Backup plan?
• Spreadsheets and forecasting – you need to put together a simple spreadsheet to see whether your business idea looks like it could generate the money you need to keep working on it.
  Use this simple Financial Projection spreadsheet to start >>

5. Defining your product/service for your customer

Defining your product or service is a crucial step in starting a business. You’ll need to identify your unique value proposition and how it differentiates from your competitors.

Your “Elevator Pitch”:
A great way to know if you’ve defined your core product is to ask “What’s your 5-10 second pitch for your product?” Can you explain it clearly in one or two sentences to a person who knows nothing about it? 

This involves developing a clear understanding of your target market’s needs and preferences.

You’ll also need to develop a pricing strategy that reflects the value you provide to your customers. This involves analyzing your costs, competitive pricing, and market demand.

• It’s critical to have a narrow and clear description (elevator pitch) of your product/service
• What problem are you solving? How are you doing it better than anyone else?
• What is the immediacy of your business need? In other words do people NEED what you are selling, or is it a luxury item they can do without. And if they DO need it, how FAST do they need it? Like gasoline… you need it now normally. Businesses with high need and immediacy are lower risk than the opposite.
• Will your service/product be “in vogue” in 5 years? 10?  Is this something that could fall out of favor or become obsolete?
• Identify your customer’s pain. It must be there and you must be solving it.

6. Your team

Building a strong team is essential for the success of any business. You’ll need to identify the roles and responsibilities required to operate your business and hire employees or contractors with the necessary skills and experience.

You’ll also need to establish a company culture that aligns with your values and goals. This involves developing a mission statement, setting clear expectations, and providing opportunities for growth and development.

• A strong team is a huge part of success
• Can you do it all yourself? If not, for how long?
• Do you need a partner or co-founder?

7. Legal considerations

Legal considerations are an important aspect of starting and running a business. You’ll need to understand the laws and regulations that apply to your industry and comply with them.

This includes protecting your intellectual property, such as trademarks and patents, and establishing contracts and agreements with suppliers and customers. You’ll also need to stay compliant with employment laws, such as minimum wage and overtime requirements.

• Create a business entity (read more on that here – LLC, Sole Proprietorship, S-Corp, etc)
• Consider any ways that can land you in trouble legally
• Learn about the corporate shield of liability and how it can protect your personal assets
• Do you need waivers, Terms of Service Agreements, etc

8. Understanding your target customer

Understanding your target customer is essential for developing a successful marketing and sales strategy. This involves conducting market research and analyzing customer data to identify their needs, preferences, and behaviors.

You can use this information to develop customer personas and tailor your messaging and promotions to appeal to their interests and needs. Additionally, you can use customer feedback to improve your products or services and enhance the customer experience.

9. Daily operations

Managing daily operations is a critical aspect of running a successful business. This includes developing standard operating procedures, managing inventory, and ensuring quality control.

You’ll also need to develop a system for managing customer inquiries and complaints, as well as tracking and analyzing business metrics such as revenue and expenses.

• Do your research to make sure you understand all the other components such as Plan, Marketing, Understanding your Customer, Finance, Sales, Legal, etc
• Develop a business plan that addresses these things – PARTICULARLY the area of how you will find your target customer, who they are, and how you will sell to them. This is the part most entrepreneurs assume will happen magically, but in reality, you need a plan and need to execute it. Try things, test things, revise and revise until you get it right.
• Managing your time and your resources and your team if there is one
• Measure and track your efforts, sales and expenses. Which of your efforts is paying off, or which can be improved on, or which need to be revised, or scrapped?

10. Bookkeeping

Bookkeeping involves managing your business’s financial records, such as invoices, receipts, and bank statements. This information is used to track business performance and ensure compliance with tax laws.

You can use bookkeeping software or work with a bookkeeper or accountant to manage your financial records and generate accurate financial reports.

11. Protecting your business

Protecting your business involves establishing systems and processes to mitigate risks and ensure business continuity. This includes developing a disaster recovery plan, securing your physical and digital assets, and complying with data protection laws.

You’ll also need to develop a system for managing and mitigating risks, such as developing a risk management plan and obtaining insurance coverage.

• Consider worst case scenarios
• Data and website files backup – could you lose everything if your server host burned or someone erased your data?
• Backup suppliers, sales channels etc. For example, if you have one main supplier, what happens if they drop you? Or if you only sell through Amazon, and you get banned, what happens?

12. Exit strategy

Developing an exit strategy is an important aspect of planning for the future of your business. This involves identifying potential exit scenarios, such as selling the business or passing it on to a family member or partner.

You’ll also need to develop a plan for managing the transition and ensuring business continuity, such as developing a succession plan and training new leadership.