A successful small business must have 4 things in their corner – product, market, money & people.
Whether you’re a startup looking for venture capital or you want to become a successful small business all on your own, there are a few basic – but important – components every business must have. This four component formula is used by high growth business but I believe they need to be in place for ANY business to grow consistently.
Venture Capitalists will only invest in a business if all these factors exist. Are YOU going to invest in your own business without these?
Here’s the quick and dirty breakdown:
Product — a clear offer, better if it solves a specific problem and is easy to describe.
Market — a market for the product means people need it, want it and get it. It’s best if there’s already proof that demand for it exists.
Money — the owners must have enough money available to keep funding the business while it’s in startup mode. (Many businesses fail because they run out of money and underestimate the time it takes to get their product in front of the right buyers.)
People — execution is everything. Ideas are cheap. It’s the action that follows them that makes a business work. A business can have all the three above and still fail without people who are tenacious, curious and ready to carry out under all kinds of circumstances.
Ready to dive deep?
Product — a clear and demonstrable offer, which solves a specific problem at a reasonable price
Superiority of products and services
For a small business to grow and thrive, it has to be offering clear, demonstrable (even obvious), products and services to its clients. Products that are superior to what is already in the market is an added advantage. This can serve as your unique value, making you stand out above the competition.
Demonstrating a problem your customers and potential customers have and that your product will be solving must occur. The problem needs to have a subsequent level of difficulty that people struggle to solve, even with the current products in the market.
In other words, you need to identify a market gap (niche) that is yet to be filled, or has room for a better solution. Use the opportunity to describe to your customers how well your product will solve their problems- save time, improve health, save money, improve the productivity of business, quality of life, to mention a few.
The world marketplace is huge. Burning and specific needs are easiest to target vs. general problems.
Start by establishing high-quality specialized products or services.
This may include concentrating on specified products or beginning by focusing on a narrow line of products.
When the product is well off and moving fast, it could be time to develop another line of product or service. But try to wait until delivery of the first one is running smoothly. The need to expand is paramount for this to work.
Keep selling to your customers the product they want until a need for another product arises.
Properly determined price is essential for maximizing marginal revenue. Typically, prices are inversely related to sales volume. What that means is you need to sell more of lower priced services to stay afloat.
Keep your prices high enough to give you good profits, and reasonable enough to keep your clients returning.
Market — people know the product exists and want it
The world of business is competitive, and so should you be. Marketing strategy should be among your central focus. Know which channels you need to establish a strong presence for people to develop awareness about your brand. They need to include your target customers.
Have a specific message about your products and services to showcase in the marketplace, that’s effective enough to intrigue prospects and turn them into paying customers.
Good marketing strategy and captivating messaging gives your product solid traction in reaching the marketplace. Make your case highly convincing by showing the world that you already have customers lined up to buy your products or services.
Make sure you’re successfully moving people through all the phases of your marketing funnel, and fill any major holes where people are losing their interest along the way.
Evaluate marketing performance
Evaluate your marketing strategy on a regular basis. Know what’s working, compare results and use the information to double down on the successful customer acquisition methods and drop expensive channels that aren’t working. Proper reviewing will help you answer the following questions:
- Are your prices competitive?
- Is your brand & messaging positioning you as an authority?
- Are your customers fully satisfied?
- Does your product leave them with the need to come back?
- Is your funnel working?
Maintain the customers you already have and use them to promote your products
Keep selling to your current customers and work extra hard to satisfy them. They are your biggest brand advocates.
Don’t get busy reaching for new ones and neglect the ones you already have. Getting new customers is expensive. Use your direct interactions to promote your products and ask customers to encourage others to try your products as well. Get case studies from those who are excelling as a result of your help.
This is an inexpensive but powerful tool, especially if you can build strong customer relations from the very beginning.
Money — a practical plan to finance your business during its start-up mode
A good financial plan is a projection of how well thought out the business plan is. It can also predict how well your venture stands the hardship of the lean months or even years. A startup doesn’t earn profits right away and it may take time for substantial returns to be seen.
When it comes to financing your business, never rely on hope or vision. Make sure you’re prepared. Gather facts and make credible assumptions. If you don’t know where to begin. Ask seasoned peers to share their experiences and words of wisdom.
Understand your numbers
Whether your business is at its inception stage or it’s up and running, failing to understand financial repercussions on your daily operations is a grave mistake. For newer business, you must be prepared to run a business without making substantial cash inflow.
This requires figuring out the period you can operate safely before you can make a substantial profit, and how much money you can afford to spend, to keep your business surviving during lean times.
Create multiple streams of backup-income
Counting on one source (a single product, customer, service, etc.) to fund your entire business is risky. Keep growing your tribe of loyal customers and, if relevant, create a recurring revenue model to create consistent income.
Experiment with creating new offers for currents so you can keep serving their needs as they grow.
People — inherent fascination, tenacious and passionate, your vision of taking the business to the next level
Leadership team (you!)
The fourth major area worthy of investment and often overlooked, is you and your partners. There are endless business ideas roaming around out there but it takes people to implement them.
That often means having the tenacity to get through the hundreds (sometimes thousands) of roadblocks that we face as owners.
Your strength, mindset and tenacity will get you through those setbacks faster and your curiosity will find you a better solution. One you may not have considered before the setback but gives you a superior product, delivery, campaign or support to go further.
Never underestimate your own personal power and abilities to persevere and reach your goals. It’s all up to you.
Whatever you can’t do well yourself, you need to find others who are the best at doing those tasks.
Your people are some of the most important assets to your business. Having the right people who share your goals and have a vision that is aligned with that of your business is the final ingredient to a successful business venture.
Customers buy from people, so you need to find people who can help in branding and building your business, who are ready to do whatever it takes to create a strong relationship with customers and nurture loyalty.
Accompanied by the first three essential components, a passionate team that is willing to go the extra mile under all circumstances to make the customers happy and the business flourish is what will help you create, build and sustain a successful business.
Need support in setting up these four components? I help committed business owners build models capable of bringing them to the next level. Check out my offers designed for small business success here.