5 Strategies to a Successful Business
By Osmond Vitez
Successful businesses result from creative strategies and hard work by owners and managers. While businesses operate in different industries or competitive markets, certain basic principles of business exist for creating a successful business. These basic principles are used to develop strategies that give managers goals and directions for achieving the best possible results from their efforts. Five business strategies for successful businesses are the business plan, financing, filling a market niche, developing a specific market strategy, and creating a dominant company culture.
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A business plan is the road map a business follows during the early stages of its life. This road map helps managers understand where the boundaries and limitations exist for their operations and what the goals are for growing their business. Business plans also help owners and managers obtain start-up financing or loans for their operations since little to no financial history is available for these start-up companies.
Businesses need to understand how they will finance their operations and where money will come from for future operations or expansions. Properly financing business operations is crucial to companies since fixed cash payments can seriously damage a company’s cash flows. If companies use equity to finance their operations, too much outstanding stock will lower the value of company shares, creating little to no value for outside investors. Developing a strong finance plan is essential for business to succeed in the business marketplace.
In free market economies, such as the U.S. economy, companies must find a consumer niche that is not currently being filled by other companies. A market niche may be small at first, but may grow depending on the success of the company filling the niche. Market niches may also be something as simple as re-creating an existing product or finding a new feature for an already popular consumer good. Completing a market forecast may helps companies learn where market niches exist and the possible route to fulfilling these niches.
Because each segment of a free market is different, companies must develop overall business strategies that help them succeed in their segment. Companies must understand Porter’s Five Forces of business: supplier power, substation threats, consumer power, entry barriers, and business rivalry. Michael Porter, a Harvard economics professor, created these forces as the framework companies must follow to maximize their profits. Companies should analyze these market forces in their business industry or segment and see if they can develop strong operations that will result in profits.
An important trait of successful businesses is the company culture. Company cultures are mostly derived from the owner or business directors; they have the ability to translate their vision to managers and employees, creating a sense of employee ownership and willingness to succeed in their tasks. Owners can foster their culture by using positive reinforcement, performance bonuses, and team building activities to foster employee loyalty.