Many budding entrepreneurs, with aspirations of succeeding, dive headfirst into their new business venture. Some triumph; others fail.  With so much uncertainty in the current economy, many hopeful entrepreneurs may have to toil hard just to keep their business viable, let alone make it thrive.

3 fundamental factors to succeed in business

There are myriad factors to consider when starting a small business.  Many will agree that three critical factors will help facilitate success. They are:  Having a viable idea; relevant skills & attributes; and adequate capital to invest in the business to sustain it until it generates income on its own. 

How viable is your business?

It may seem obvious, but one critical aspect is to test your business’ viability before your start.  Having a good idea is not always enough.  You must have a market and customer base that want your products or services and will pay your asking price. 

To begin, do some research to determine if there is a specific market need that is not being satisfied by others and then form a market niche using your results.  This will provide a solid platform for your business with opportunities for it to grow into a viable enterprise.  Solicit feedback from potential customers to determine if there is a market for your products or services and what price they’d expect to pay.  This feedback is an essential part of building your business.

Acquire a good measure of the competition you’ll face, since it will give you a clearer understanding about what demand exists for your products & services.  If you can’t use the information you gather to gain an “upper hand” against your competitors, you’ll find it much harder to turn your business idea into a viable one.  Your data gathering will enable you to create your business plan – tailored to you and your customers’ needs.  You might make minor adjustments, major changes or even abandon your business idea altogether.  But the exercise will be worth it and will set you on a path to achieving success.
    
Consider your skills & attributes

It’s essential that you have “what it takes” to turn your business idea into a sustainable business.  Your knowledge & experience, as well as your personality, skills, attitude & commitment to your business will add great weight behind your quest for success.

But if you are lacking in some areas, don’t panic.  Admittedly, having natural ability will be a huge advantage for many aspiring entrepreneurs.  But that doesn’t mean you have to start off with all of these attributes.  You can acquire experience & knowledge as you go, and seek advice, support and resources from others.  Many will argue that other qualities such as; ambition, passion, drive, resilience, commitment, self-confidence, belief & discipline are just as vital and separate the losers from the winners.

Can you afford to start your own business?

To earn money, you may need, at first, to invest or spend money.  Having adequate funds at the outset is likely to be essential to pay for your business’ overheads and your own living costs until your business produces a livable wage for you.  A few achieve success almost instantly – but most do not. 

Use the 3 tips in this article to give yourself a “head-start” and make your business the success you dream of.

A lot of businesses take pride in being excellent at customer acquisition.  Some business owners even use this as a primary measure of their success.   It’s probably a good time to ask yourself how much time and effort you actually spend in acquiring new customers, formulating marketing strategies, regulating lead generation expenses, finding lead distribution channels, and controlling conversion rates.
 
There’s no doubt that prospect generation is essential in running a business.  But if you think about it, having your best people running around winning new customers does not necessarily differentiate you from your next competitor. They are most likely doing the same things as you – devising new strategies to acquire more customers and converting your existing customers as their own.
 
You have to be wary of just chasing the next best customer.
 
Ask yourself the following:
 
*  Do the people in my company truly understand that their job is to keep existing customers?  Standard customer service isn’t always enough – You have to be certain that your team is dedicated in retaining your existing customers, to help ensure that they continue to do business with you. 
      
If you answered yes, there should be a direct connection between your team’s compensation and the positive or negative outcome of retaining customers – How will they feel the loss if one of your customers cancels their business with you? 

*  Do you have clear-cut retention goals incorporated into your business plan? Have you made these retention goals clear to all your team and how these goals may affect your business if they are not achieved?

*  Do you have a reporting process to determine if your company’s performance meets its goals? Are your managers regularly updated about the company’s performance against the current business plan?
 
Every dollar spent on customer retention generally exceeds the benefits and returns of money spent on acquiring new customers.  This is especially true in today’s challenging economic environment.  However, that’s not to say that you should not invest in customer acquisition as well. 
 
Finally, you need to distinguish the difference between retaining customers and providing customer service.  Customer service is the process of providing your customers’ needs with high levels of competency, efficiency, and customer satisfaction. There is an emphasis on customer satisfaction, which underscores the pleasure to serve rather than being a chore.
 
On the one hand, customer retention is about valuing customer relationships; finding ways to serve them better; or offering something more to ensure their loyalty and satisfaction.
 
How can you enhance the service you’re currently providing your customers?  Do your customers have needs which they haven’t realised they needed? 

If you don’t ask yourself these questions now, you may find your competitors enticing your customers away by fulfilling their needs!

Fortunately, all is not lost.  You can stay strong in lean times and help is often at hand to help you keep your small business operating during tough times.  Here are 4 tips that I have put together for you to survive a downturn:

Reduce overheads

Cash flow is the number one killer for small businesses and the last few years has seen record numbers of bankruptcies and liquidations.  It’s crucial to manage your cash flows, at all times.

Reducing overheads means finding ways to keep more hard earned cash in your bank account.  Look to trim off some of your administration overheads – can you email quotes, invoices, etc, rather than pay for postage?  Look for opportunities to produce your product or deliver your service more cheaply – do you need to produce as much?  Review your rental and loan agreements – could you renegotiate better terms?

Staying solvent is crucial and trimming the fat on some discretionary overheads will help.  Use your time effectively. 

Maintain good lines of credit

I recently wrote about maintaining good business relationships with your Bank Manager.  Banks also have to adapt to market conditions and regularly change strategies to survive.  One way they do this is by reviewing their lending policies and tightening their belts. 

Don’t give them any reason to terminate your loan.  Make your repayments on time.  If you have a good track record with your bank, you’ll probably be an ideal customer for them, so you should still be able to open lines of credit with them if you need a “helping-hand”.  Lines of credit can give you a financial buffer to ease cash flow.

Revise your marketing

I’m not suggesting that you slash your marketing budget.  But you should look to make sure that your marketing budget is used wisely and that you’re not wasting money on advertising that doesn’t work for you.

What is your target market?  Sit down and review your current marketing strategies.  Look to tailor your marketing efforts so that your money and effort is allocated towards your preferred customers.  Consider using the internet more – with the correct approach you’ll be able to focus on targeting the right customers for your business.

Seek out an Online Publishing & Media Distribution firm who specialise in designing highly focused, marketing campaigns.  

Seek help

Government departments know that small business entrepreneurs are finding it tough at the moment.  They understand that small businesses contribute significantly to the economy and want to do whatever they can to help. 

If you’re finding it difficult to honour your tax and payroll commitments, don’t be afraid to discuss repayment options with them.  Or better still, ask your accountant to liaise with them – you’ll find that a good chartered accountant or business advisory services specialist will have skills and experience to negotiate on your behalf.

Many small business entrepreneurs do survive economic downturns.  The successful ones take responsibility and seize the opportunity to analyse their situation and then act appropriately. Keep your Bank Manager happy, stay in touch with chartered accountant and use a small business advisory services specialist when necessary.

In the past, we may have regarded this relationship as a partnership, where each party stood to gain something – a classic win/win situation.  Sadly, as the credit crunch continues, this is becoming less so as banks are tightening their belts.  But for many business owners, especially ones who are feeling the pinch, or seek funds to help grow their businesses, this relationship is important.  It needs to be fostered.  If your bank has lent you money for your business, it’s important you create the right environment so they continue to lend to you.    

Lenders hate surprises.  Keep communicating with your bank even if you are irritated by its approach.  Ensure that your correspondence and communication remains cordial – remember that honey and sugar catches more flies than salt and vinegar.  Inform them of any major plans you may have for the future and don’t be afraid to ask your bank manager for advice and help.

Most banks want to be confident that:

*  You will be able to meet loan repayments from your business’ operating activities (or net profit before interest and tax)

*  You have adequate security – banks are continuing to decrease their loan to value ratios (LVRs) regularly and will regularly adjust asset values, which continue to decrease.  Banks will rarely value your assets at book value or open market value and will take a very defensive stance by valuing them at “fire sale” values.

*  Your business will remain solvent and continue to trade, profitably.  Build some “margin” into your financial projections as most lenders will adjust your financial assumptions as a precaution

It’s important that your bank manager knows your business.  Do you rely on sales at peak times of the year?  Do you understand the market you’re in?  Bank managers are likely to have dozens of lenders to look after and can’t be expected to understand each customer’s markets thoroughly.  But look to ensure that they know yours, as you’ll find it much easier when you need their help.

Remember that maintaining a healthy business relationship with your bank may be the difference between success and failure.  They are a business too – don’t give them a reason to seek an alternative for your custom.

It could be a plan to promote a brand or achieve a sales target within a given time frame, setting smart goals is of paramount importance. Needless to say, the success or failure of any business also depends largely on the kind of goals that define it.

For those of you unfamiliar with SMART, here’s what it really means. SMART stands for – specific, measurable, achievable, relevant and time based. They, in fact, form the basis of setting efficient objectives.

Here’s a little about each:

>>  Specific: It is a very important element of business planning. Get straight to the point about what you want to achieve, when you want to achieve, the exact requirements and constraints, and above all, why you want to achieve the specific objectives. If possible, use percentages, figures, ratios and fractions to highlight your goals. For example: I want to achieve 20% more sales than I made last year.

>>  Measurable: It means that you should be able to measure your present performance against these objectives. So when you aim at a 20% profit margin you have a measurable objective.

>>  Achievable: Be realistic when you set targets, or else you might end up being very disappointed if you do not meet them. They should not be too easy or too difficult to attain.

>>  Relevant: Make sure the objectives you set are closely linked to your kind of business.

>>  Time based: Targets are of no use if they are not set within a given time frame. So when you say that you need to increase production volume by 500,000 units, make sure you specify the time as well.

Do you still believe that setting SMART goals for business is rocket science?

Not only had they ignored the tax man for 3 years, but it’s also poor business practice. 
 
Recessions often provide a “wake-up call” for many business owners as it forces them to evaluate what they are doing.  In the current uncertain climate there is very little excuse for ignoring your key financial indicators. 

One efficient way to understand your business’ financial performance is to prepare a simple cash book.  For as little as $100 per month, you can generally get a book-keeper or accountant to do this for you.   
 
Understanding your current profitability, cash flow and break-even points will help you to review your spending and help you to set budgets.  This may include putting money aside for tax liabilities and owners’ drawings/salaries.

I have seen far too many small businesses suffer because their owners failed to meet their tax obligations or pay themselves.

Talk with your accountant.  They should be able to advise you how much to set aside for tax – I accept that this may reduce cash flow in the short term but it may avoid unnecessary surprises later.  Consider setting a regular amount aside in an interest bearing deposit account or use your credit card for some expenses to take advantage of the interest free periods that many credit card companies now offer.  
 
Also examine your expenditure as there may be ways to easily reduce costs too.  I have put a complete stop to anyone purchasing anything in my businesses without my express approval. 
 
This had an immediate positive impact on our stationery, printing and postage expenses.  Remember it’s your money that your employees are spending…not theirs!

I am currently consulting with a client who “shouted” their staff morning tea twice a week.  On my advice, she now buys the ingredients and asks her daughter to bake home-made muffins and she also now provides on-site coffee facilities.  She is delighted that she now saves over $700 per month from just this one simple change.  What small changes could you make?
 
But be careful…many small business owners cut back on the wrong expenses.  Marketing and sales remains an important area for many of them.  However, I have lost count of the number of clients who blatantly waste money on marketing and advertising campaigns that simply do not work.  They simply throw more money at it, hoping that the ‘phone will ring.  For more marketing tips, visit www.themarketingdude.com

Is it time that you reviewed your business finances?  Who knows…a few hours of your time may result in some pleasant surprises.

That was the question Dr Michael Masterman asked me to consider — when he sent me a review copy of his new speed reading audio course three months ago. And you won’t be surprised to hear that I didn’t believe it!

Now, I’ve always avoided learning how to speed read.

Why? Because I always believed it’d take hours of training to really “work properly.” And I’d heard a couple of horror stories too. (One very well-known six-CD course essentially suggests listening to fast music while reading. Now that’s incredibly draining – and not exactly suited to a slow-paced romance!)

Michael promised I would literally triple my reading speed in well under an hour (without fast music or other gimmicks!) — and said that his audio course included tests to prove it. He also said I’d be able to maintain that super-fast reading speed, even weeks later.

I took the course. It worked. And I’m STILL reading at lightening speeds!

That’s exactly why I wanted to write and tell you about Michael’s “Speed Reading Secret” course today!

But don’t listen to me chat about it. If you want to blast through e-mail messages, Web pages, revision, books or reports (and pick up an amazing new vocabulary along the way), then check out his site:

The course includes tests, so you can literally see just how well you’ve improved. And if you don’t improve enough, claim your money back through his guarantee!

Michael predicts the average person could save one day a week following his advice. I think he’s probably right.

Enjoy!

Broadening the scope of your efforts will enable you to reach unlimited numbers of potential clients.  The key to successfully promoting your business is simple:

1. Establish your target market
2. Learn your client’s most intimate desires in order to find customers, bring them in to your business, and deliver exactly what they need (and keep them coming back for more!)
3. Stock your marketing arsenal with a variety of powerful advertising tools
4. Track your progress to determine what works for your business – and don’t be afraid to change your strategy as necessary

Once you’ve developed your marketing strategy, you need to ensure that your message cuts through the clutter and speaks to your customer. This is where your Unique Selling Proposition (USP) comes in.

Your USP should stand out from the crowd – and capture the essence of why your product or service is superior to the competitions’.  If you have already developed a USP for your company, take a moment today to review it.

Is your USP powerful enough to have customers queuing up at your door?

Choosing a mentor is an important decision. Start by searching for someone in your business field that is currently in the place where you would like your business to be. Ask for a small amount of their time on a weekly or monthly basis, either in person or via a teleconference. Mentors are generally business owners who have more experience than you, who have achieved a higher level of success and who can become a trusted advisor to you and your business; and, their time is often free.

As a business owner, you are generally on your own. No more bosses to ask advice from and often few employees to bounce your ideas off of. Every business owner needs to have a great sounding board and sometimes they need emotional support throughout their business journey. Read my article, Why it Pays to Have a Network of Advisors, for more information about choosing the best mentor.

Learning from the business mistakes that your mentor may have made may help you avoid those same mistakes while you are growing your business. A mentor’s perspective and past experiences will help you to propel forward quicker in your business strategy.

Business mentors can also offer you access to an extended social network, offering you and your business access to senior decision makers to help you along. People like to help other people, and mentoring is a primary way for successful business owners to give back to the business community.

Mentors provide you with a no pressure and no ulterior motive relationship. This level of openness fosters better communication and a comfortable learning environment. The establishment of trust is something that typically grows into a long term trusted business relationship.

Don’t be afraid or too proud to ask for help in business. Mentors are a tremendous resource for any business owner, at any stage and will help you go further than you would be able to go on your own. Seek out a mentor to begin moving your business forward.

It is highly likely that you work 16 hours a day and only have time for the bare necessities. Maybe you even miss dinner every other day and hardly have time for your family.

Does owning your own business really have to be this way? The answer is no, but you need to learn how to better manage your time. If you don’t start valuing your time, who will? Your customers sure won’t. They only see and care about the final product, not what goes on behind the scenes.

Time management is vital to your work-life balance, but it can also lead to higher operating efficiencies for your business.

A very important step in better managing your time is delegation. You need to learn to let go of some of the tasks you are currently in charge of and allow other people to take care of them for you. Many small business owners refuse to delegate their tasks, their reasoning being that other people won’t do as good a job or that it would waste too much time showing another person how to do the job right.

These are normally just excuses because the truth is, most of them are afraid to lose control over the tasks. They fail to realise that no matter who is actually doing the job, they still have the final say over it.

You may also be hesitant to delegate because you’re concerned that the costs associated with it will be too high. That may or may not be the case depending on how you approach it. If you spend enough time researching who the best and most cost efficient provider is, chances are you will not incur the high costs you fear.

Also, remember that delegating would allow you to concentrate and spend more time on the jobs that you are better and more efficient in. Finally, delegating doesn’t have to mean that the quality of your tasks will suffer. Sometimes, if the provider you choose is a specialist in the job, he or she may be able to do an even better job than you could ever have done.

For more information on how to better manage your business have a look at my article Leverage your Time and Use it More Productively or go to to www.secretstobettertimemanagement.com.