THE 7 KEYS TO RUNNING A SUCCESSFUL BUSINESS
During my 8 years as a CEO, I was always studying and learning. I wanted to become a better leader. And I wanted to understand the keys to running a successful business so that I could apply lessons from the greats to my medium sized business.. My education took me to Cranfield School of Management, the UK's leading business school. And I read extensively. With such a plethora of literature and advice on what makes a successful business, it can be hard to know where to start. One of the best places to start is with Jim Collins’ book "Good To Great: Why Some Companies Make The Leap... And Others Don't." The book was written after an extensive 5 year research project, and explains what it takes to build an enduring company from the ground up. You can read my review here.
“The Seven Keys To Running A Successful Business” forms the foundation of my business philosophy and approach to business coaching and consultancy. The seven keys are mission, mastery, money, model, marketing, mindset and momentum. There is more to business than these seven keys, but for start-ups and micropreneurs, I think mastering these will take you a long way.
Here’s an overview of “The Seven Keys To Running A Successful Business.”
A strongly felt aim, ambition, or calling.”
Companies that enjoy enduring success have a core mission that remains fixed while they adapt their strategies to suit our changing world. A mission statement has two principal parts - a core ideology and an envisioned future. The core ideology is the glue that holds your company together as it grows and changes. It’s your company’s core values - its core purpose or fundamental reason for being. The second component of the mission statement is the envisioned future; this states exactly the direction in which your business is headed and attempts to balance the possible with the seemingly impossible. For example:
"To care for the world we live in, from the products we make to the ways in which we give back to society." ~ Aveda
"To bring inspiration and innovation to every athlete in the world." ~ Nike
“To build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” ~ Patagonia
Your mission is what will keep you going through tough times. Your mission is what your customers will resonate with. And it's your mission that will help you to create an aligned working environment, and recruit employees with the passion to help you drive your business forward.
Comprehensive knowledge or skill in a particular subject or activity.”
Mastery is one of my favourite words. But it’s a trait I’ve found in surprisingly short supply in the business world, and this is probably what explains the high failure rate of start-ups. Fortune magazine puts this figure as high as 9 out of 10 start ups failing.
Why do so many businesses fail?
A key reason why so many businesses fail is they don't find enough people to buy their product. This is a failure of marketing and sales.
When I'm coaching and consulting with businesses at the start up stage, I frequently observe the following:
- The owner has little experience in sales and so struggles to create robust sales processes that convert.
- The owner struggles to select the right marketing strategy and channels for their business because they have limited knowledge of marketing, and in some instances are unsure what works in their industry.
- In order to save money, the owner learns 'DIY marketing' rather than invest in bringing in an expert to run one or more of their marketing campaigns. All the while the owner is learning how to market their business, they're not actually generating leads and prospects.
- The owner simply doesn't do enough of the right kind of marketing activity. It takes far, far greater levels of marketing than we think to start to get any momentum. I wrote about this in my article, Sky Rocket Your Business With The Marketing Rule of 7.
- The owner gives up just as their marketing campaign is about to deliver results because they don't understand how momentum works (see below).
- The owner outsources a key activity without knowing how to measure whether the agency is competent to deliver or not.
To take your business from the start up to growth stage, mastery of sales and marketing is essential. This is because it's a robust and consistent sales and marketing process that will get the business to break-even point. But mastery takes time, practice and patience. To become a master at running a successful business takes extensive practice, just as it does for athletes and artists to become elite performers. Classical violinist Nicola Bennediti puts in 3-7 hours of practice every day. Tennis ace Roger Federer trains for 10 hours per week in addition to his on-court practice.
Or as basketball legend Michael Jordan said:
I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot… and missed. And I have failed over and over and over again in my life. And that is why I succeed.”
Exactly the same attitude towards mastery is needed to run a successful business. It comes down to doing the basics right, and this takes practice. Once you’ve got the fundamentals down, you’ve got a solid foundation to build on.
How committed are you to becoming a master at business?
Your business has a strong economic engine and is fundamentally profitable.”
High growth businesses know exactly what drives their ‘economic engine’ to make their products and/ or services both affordable for their customers and fundamentally profitable i.e. what products and/ or services bring consistent high levels of sustainable monthly cash flow.
Apple does this by tapping into streams of revenue that produce profits month after month. And it’s not, as you might think, through the sale of products like the IPhone or IPad. Apple started generating regular monthly revenue back in 2001 with iTunes, a free music player with a built-in store. Ever since then, Apple has been raking in hundreds of millions of dollars a year from iTunes through the sales of music, movies, and books.
People think that Amazon is an online retail store. But it's so much more than this. Amazon Web Services (AWS) was a little known, infrequently thought about part of Amazon until earlier this year when Amazon revealed its revenue figures. In the first quarter of 2015, AWS brought in over $1.5 billion of revenue, a figure which grew to $1.8 billion the following quarter and to $2 billion in the third quarter. AWS is made up of a range of cloud computing products and services. It's so large that it’s now at least 10 times the size of its nearest competitor and hosts popular websites like Netflix and Instagram. What's more, it's highly profitable and a cash cow for Amazon.
Do you know what drives the economic engine of your business?
A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.”
Put simply a business model answers the question: "How do you plan to make money?" Behind that question is a further set of questions:
- Who are your target customers?
- What customer problem do you solve?
- What value do you deliver?
- How will you reach, acquire, and keep customers?
- How will you define and differentiate your offering from your competition?
- How will you generate revenue?
- What's your cost structure?
- What's your profit margin?
There are no one-size-fits-all business models. In fact, most companies use a combination of business models to arrive at a unique model. What’s important to understand is that every option has financial consequences that affect your business model.
Are you clear on your business model?
Marketing is the most important activity when it comes to determining a business’ profitability and success. The more effectively a business is able to market itself, generally the more financially successful and stable it is. When it comes to marketing, it's important to bear in mind that:
- Planning an effective marketing strategy is intimately bound up with the planning process for the entire business.
- Marketing is not just promotion as it is sometimes presented. Marketing covers the 7 Ps of product, placement, price, people delivering the service, process, physical evidence and of course promotion.
- Marketing costs. It's not unusual for a start-up to spend 50% of its income on marketing to get the business off the ground whilst a business going for aggressive growth may spend 30%.
- Marketing requires patience and consistency as I explain in Sky Rocket Your Business With The Marketing Rule of 7. Most business owners underestimate the volume of marketing activity needed to attract potential customers.
A habitual or characteristic mental attitude that determines how you will interpret and respond to situations.”
Much of our understanding about mindset stems from the work of Stanford psychologist, Carol Dweck, through her research into how the power of our beliefs, both conscious and unconscious, and how changing even the simplest of them can have a profound impact on nearly every aspect of our lives.
Dweck found that one of the most basic beliefs we carry about ourselves, has to do with how we view our personality; whether we have a 'fixed mindset' or a 'growth mindset.' A 'fixed mindset' assumes that our character, intelligence, and creative ability are set and we can’t change these in any significant way. A 'growth mindset' on the other hand thrives on challenge and sees failure not as evidence of our lack of intelligence or ability, but as a springboard for growth and stretching our existing abilities. Our behaviour, and ultimately our capacity for happiness, stems from which of these two mindsets we manifest and is developed from a very early age.
I explore this further in my article The Mindset of a Champion.
The impetus and driving force gained by the development of a process or course of events.”
Momentum works in exactly the same way in business as it does in physics. It takes a tremendous amount of energy to launch a new business and set it on the path to sustainable growth. Far more effort than we think, especially when it comes to marketing; most business owners under-estimate just how much marketing is needed to get any sort of traction. But once off the ground, it takes much less energy to bring in a steady flow of new leads and sales.
Think of creating momentum like launching a rocket ship. A space shuttle uses more fuel in the first few minutes of its flight than it does the entire trip. Why? Because it has to break free of gravity, and this requires an enormous amount of energy. Successful businesses have momentum on their side. If you start to lose momentum, it can be extremely difficult to start it up again. Momentum is one of the secrets of a successful business that you must develop and maintain in all your activities. (Read my article on The Power Of Momentum In Business to understand why).
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Questions: Are you applying all 7 keys to your business? Is there one key that would help you to build a more successful business?
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About Denyse Whillier
I help micro business owners (with less than 9 employees) formulate and implement the right business strategy so that they can make the transition to a small business (10 to 49 employees) and then on to a medium sized business (50 to 249 employees). I do this by helping them to increase profitability, continuously improving their business results and focusing relentlessly on their core priorities. A former CEO, I took a leap of faith when I left my 25 year corporate career to set up my London based business coaching and consultancy practice. Because of my practical experience in the trenches, hard work, warm, no fluff, down to earth approach, I've built a global reputation, and am delighted to have a client list in the UK, US, Canada and Australia.
To find out more about the different ways of working with me, click HERE. If you're familiar with my work and would like to discuss how I can help you grow your business, book a 30 minute informal Skype coffee chat using this link. There’s no hard sell. Just solid advice and a straightforward, honest assessment of whether 1:1 business coaching or business consultancy would be a good fit for your business, the results you can expect and how to get started.