Some success factors have a greater impact depending on where the business is in the growth cycle. For example, for a new business, money, marketing and product are very important. As the business develops and grows, the other factors, such as owner, team, and systems development, also become very important. While each is just as important as the other, the most important will always be money, marketing, and product. Finding candidates who are not shy is a part of the best talent acquisition strategies by hiring managers.
Most companies cover the product side, providing a good enough product or service to be successful. According to countless research results, marketing and sales and money are the biggest challenges for small businesses. But the key factor responsible for most successes and failures is money management. You can read the article “How to Eliminate the Biggest Money Mistakes in Small Businesses” for more details.
A key success factor responsible for most failures
Having failed many times in business, I agree with many business analysts that out of the top six success factors, poor financial management is the number one factor responsible for business failure.
One of the most important lessons I have learned in 30 years, and which has contributed the most to the success of my business, was given to me by Steven Walker, (CA) who taught me that all information you need to make the right decisions about your business is in your numbers. It will provide you with the financial anticipation and foresight needed to make the right decisions every day. Want to know where to spend your advertising money, where the most business is coming from, and what are your most valuable products and customers? Where is the significant potential for growth and profitability? Listen to your numbers, they will guide you. Without these numbers, you won’t be able to make accurate day-to-day decisions.
Each key success factor has its own numbers.
Each of these 6 key success factors has its own numbers. It’s up to you to find them and measure them. What you don’t measure, you can’t manage. This is one of the reasons so many small businesses fail. They just don’t know their numbers. If you don’t know your numbers, you don’t know your business. By making small changes in any of these key areas, you can make a huge difference in success, growth, profit, and revenue.
These are the basic numbers that you need to assess, track, manage and constantly improve in your business. Only four factors influence the profitability and growth of a business, including yours. You don’t have to make big improvements in each of these four areas to get massive results. These factors are:
Your total turnover each month
Your variable costs are related to the production of the products and services you sell. These are variable costs because they vary depending on whether sales increase or decrease.
The profit margin percentage or price you charge.
You’re fixed costs because they don’t change.
Then there are 4 factors that affect the cash flow of any business:
The current cash, the balance of the bank account (more info on the postal banks my account).
Average receivables and days of collection of receivables
Average of receivables and days of payment of receivables
Then there are 4 factors that affect the sales of any business, these factors are
The total number of prospects or potential customers you meet each month.
The number of those leads you convert into customers.
How often customers buy from you each month
The average amount of money a customer spends each time they buy from you.
Measuring the main key figures in the important keys areas will allow you to have hindsight, the ability to understand why you have certain results (figures) in your business. Then you can start asking yourself various questions like, “What if we increase revenue by 20%?” or “What if we cut costs by 10%?” These changes will likely have many results, many of which might never have been anticipated.
Go through the list above asking yourself if (or how) each factor impacts your business and, if so, how you could change that factor to improve your business. Imagine that you improve that particular factor. How big will the difference be? How would it impact your business? Or imagine this factor getting worse.
In other words, if the “x-factor” was improved, would it make a big difference? For each of the factors listed, do a quick analysis and narrow down the list. Of course, you may find each of the items listed to be very important, or you may have others.
By asking a series of “what if” questions, you’ll be able to build a forward-looking vision that will allow you to run your business 100% better, reduce risk, have confidence in your decisions, and achieve significantly more. Profitable and grow your business substantially