What is it that makes a business successful? More than 30 percent of businesses fail within 2 years of opening, and more than half fail during the first 5 years. Oftentimes, they have similar ideas as the businesses that go on to make millions of dollars and open locations around the world. So what sets them apart?
It’s a hard question to answer, since different industries demand different approaches, but there are some generalities that are practically necessary for any business to gain traction.
Fundamental Features of Successful Businesses
These are some of the most important qualities for successful businesses to exhibit:
1. Adaptability/willingness to change. Arguably the most important quality is adaptability and/or a willingness to change. Even the best business plans, written by the most seasoned entrepreneurs, are going to run into obstacles that jeopardize or undermine their core idea; the difference between successful and failed businesses is that successful businesses are willing to undergo a strategic change to keep moving forward. You can learn more about strategic change in formal classes, or simply resolve to be flexible in how your business grows. Similarly, it’s imperative that as an entrepreneur, you keep committing to personal and professional growth; otherwise, you’ll stagnate, and the same problems will keep affecting you indefinitely.
2. Agility. If you run into a problem and you come up with a solution, there’s still a chance you won’t be able to overcome the problem; if you take too long coming up with the solution, or if it takes too long to implement, it could be too late. Good businesses are agile, able to implement new changes and experiment with new tactics on a regular basis. They’re also willing and able to jump on new opportunities as they become available, rather than letting them slip by.
3. A strong leader. Good leaders can reinforce good businesses. They sometimes serve as the face of the company, leading sales, marketing, and advertising strategies. They sometimes serve as a motivator and director for the workforce, determining how productive and efficient employees are. They’re always responsible for making critical decisions, often in trying times. No matter how you look at it, a good all-around leader is vital to an organization’s success.
4. Differentiation. There are likely hundreds of businesses like yours, if not thousands. So what makes yours different? You can’t simply copy an existing business model and hope for the best, and you can’t allow competitors to creep on your territory uncontested. It’s up to you to figure out what sets you apart, whether it’s better pricing, better quality, better service, a unique brand image, or a completely different set of demographics. There’s no single right answer, but it has to be something.
5. Money. Roughly 29 percent of startups fail because they simply run out of money. While it’s nice to imagine that any business can be successful if its idea is simply “good enough,” even great ideas will crumble if they don’t have any financial support. For some businesses, that means not generating enough investor funding at the outset. For others, it means not creating enough meaningful streams of revenue to support the business. For still others, it means hemorrhaging money on unnecessary acquisitions—or expanding so quickly the money runs out. Financial management should be one of your highest priorities.
6. Team morale. Most businesses depend on a workforce for the day-to-day operations of the company, so the strength and efficiency of that workforce will play a role in its success or failure. There are many factors that could culminate into the workforce’s ultimate potential, but one of the most important is team morale; morale impacts employee retention, employee passion, and ultimately productivity. It also determines how far employees are willing to go for their customers, and how easy it is to bring new people into the team.
7. Marketability. You may have a great product, but how marketable is it? Some truly innovative products fail simply because their inventors aren’t targeting the right demographics, or because they’re not able to showcase the best benefits of the product to a wide audience.
Modeling Your Business
Does this mean if you try your best to exhibit these fundamental qualities, your business will be guaranteed to succeed? Far from it. However, seeing your business through these lenses can help you build a more powerful, resilient infrastructure—and if you have a good business model with quality products and services to match, you’ll have a good chance of making it further than most. Talk to other business owners and experienced entrepreneurs to get a better, more personal perspective on what makes a business “work,” and never stop learning and growing.