Formula for Business Success

Business success=M+FC+CS+V+I+D+S+PDA

where:
M=Marketing
FC=Financial controls
CS=Customer Service
V=Values
I=Ideas
D=Design
S=Strategy (deliberate)
PDA=Predisposition to action

M=Marketing
This is an attitude of mind; to be effective you need to put the customer at the heart of your business thinking. Then design products and services to meet their needs and wants efficiently, easily and enjoyably. By creating a good customer experience you turn your customer into an advocate of your business and not just someone who buys from you. Ask yourself “who is my target market?” (The only wrong answer to this question is everybody). Identify your target market segments, understand them, connect with them, find out what they need and want, and create a way to deliver it to them at a profit. Click for more

FC=Financial controls
If these are inadequate it will lead to problems. More businesses fail because of poor financial control than for any other reason. We have found companies where their break even point was only reached at 108% of their production capacity and ones where, the more they sold, the worse off they became. Even sadder were firms killed by the big new order they had been desperately looking for and who didn’t realise the impact the order would have on their working capital. You should know how well or badly your business is doing financially on a day to day basis, then you can make changes when they can have an effect, and not a few months after the end of your financial year when it’s almost certainly too late. If you don’t have in your head, or close at hand, the essential numbers such as breakeven sales and gross profit margin % then you are probably missing opportunities and taking un-necessary risks.

CS=Customer service
If your business has to deal with customers and most businesses do, you have to do it well. If you do things less well than your competitors your customers will go to them and you may have to reduce your prices or increase your costs to get them back. Getting your customer service in line with your business strategy is the first step. Get someone you know to make contact with your organisation. Have them enquire about buying something or complaining and get them to tell you how they were treated. Don’t be surprised if it’s not what you expected. In terms of customer service a little training can go a long way but remember the most successful companies don’t stop at a little training.

V=Values
Increasingly people want to do business with organizations that share their values or at least have a clear set of values that they work to. They want the businesses that they use to be honest, to do what they promise and not to take advantage of them. Surveys have shown that customers want to be treated as individuals and that businesses that take the trouble to build relationships with them are rewarded by increased customer loyalty. Decide what your values are, communicate them to your market and live by them.

I=Ideas
In an ever changing business environment where competition is increasing and customer choice is getting wider, new ideas are critical to business success. New products can tap into new areas of demand where competition is less and the need to compete on price is reduced. New ideas are not only good for products, new services can be introduced or old services can be delivered in new ways. Many people crave novelty and constantly seek to satisfy this. Ask the question “how can my business do something different from my competitors?”

D= Design
This is a great opportunity for business improvement, it is neglected by many, so investing in it enables you to stand out from the crowd and differentiate yourself. Professional design applied to your business from its brand identity through to the products, services, premises, website and every other point of contact with your customers can considerably boost your chances of success. What makes one product or service more successful than another?  Get a competitive edge and use professional design. If you do not know how to do so effectively, there are proven methods to manage any type of design and achieve significant results.

S= Strategy
Creating a strategy is a way to make sense of your business environment. It provides a framework for constructing a coordinated approach to it and identifies where your resources should be used to give the best return. Research has shown that the great majority of small businesses do not design themselves a deliberate strategy but those that do grow faster, make higher profits and fail less often. When you prepare a strategy you consider your customers, suppliers, financers, and competitors to make sure that you operate and compete in your own unique part of the market in a way that will make it possible to consistently earn above average profit.

PDA= Predisposition to action
Those companies with a predisposition to action have an advantage over those who lack it; they may spot an opportunity at the same time as their competitors but will move on it first. Some firms spend too long finalising and polishing their offering, agonise over every aspect and by doing so miss the opportunity to seize a vacant space in the mind of the customer. This space in the mind of the customer is very valuable and once it’s occupied it’s very difficult for a competitor to dislodge you. A predisposition for action doesn’t mean doing things without any prior planning. It does mean moving on opportunities as soon as they present themselves. Remember, if you see a bandwagon coming it’s too late to jump on.

All parts of the formula are components of business success. Just knowing them will not move you forwards. You have to apply them. One way to do this is to review your current situation in each of these areas and work first on the one where you are least well developed. For example you may find that your financial controls are inadequate. You may not know your breakeven sales or your gross profit margin or how long your customers take to settle their bills, or even how much working capital is needed to finance each £1000 worth of sales. If this is the case then start here.

The components of the formula are not shown in any particular order of importance. All businesses need to consider all of these points, with the weakest areas getting attention first. You should try to work on all of them in a balanced way. For example; if you wait until your financial controls are perfect before addressing issues with your marketing or finding new ideas you will be in trouble. A holistic approach is a surer path to success than a piecemeal one.

If you have any ideas about a formula for business success that you may like to share or would like to discuss any aspect of the formula then call us on 01277 896452 or e mail your contact details to info@ceostra.com and we will call you back.

We provide coaching, mentoring and advice to owners, managers and directors who have the ambition to grow their businesses.