The Pillars of Success for Small Business
With endless business startups entering the market every year, and a majority unable to attain success and longevity it causes inquiry into what is it that makes some succeed and most others crash and burn.
In our work with countless startups, we focus closely on early-stage business and determine if and how a company will ultimately thrive in its chosen marketplace and win over a target demographic.
Judging whether a business will succeed or fail comes down to estimating its potential value through considering its current state of organization, structure and overall plan and ability to take in profits, allocate funds and resources while maintaining the ability continually innovate.
Contrary to the common opinion of most entrepreneurs who often believe that what determines the success of a business is the quality and strength of the concept or product behind it. While this does have some impact on the viability of a brand, it does not, however, determine the enduring profitability, or lifespan of a company.
The most innovative, high-quality or most efficient product or service is worthless if the market doesn’t know about it. If it stays behind the curtain, it’s essentially neutralized and can’t be utilized or experienced by the marketplace and will ultimately be unable to reach full potential or see an increase in value.
A strong example of this would be Coca-Cola. Is Coke the best tasting soda in the world? The healthiest, or cheapest to create or distribute? The answers to these questions do not easily lend themselves to the affirmative, yet Coca-Cola is by far the most widely sold, recognized and is one of the most valuable companies on earth.
The value of the company does not lie in the product itself but within the brand. Everything creating value for Coca-Cola lies in its branding, the logo, bottle, red and white label, which has become in a way synonymous with America and American culture almost as much as the flag itself, particularly in the eyes international communities.
The takeaway here is the branding, and marketing of a business’ product or service must be done and done well. It doesn’t necessarily mean overspending, it’s more about having a strong, consistent and sustainable marketing campaign to correctly promote a brand to the correct audience in the right fashion.
Possibly too lengthy to mention here and staying on the theme of Coca-Cola is the story of how they were able to turn their brand into a global icon, Tabasco is another insightful example of how targeted marketing can take an average product and turn it into one synonymous with its industry and built for enduring profitability.
Another common reason a business is unable to outpace others is faulty structure.
This topic can be broken down into a variety of categories within a business: financing, personnel, culture, logistics, budgeting, and so on. All of which can be equally and insightfully analyzed in detail however, the issue which causes failure within each category or pillar supporting a business’ structure is incorrect allocation of resources.
Each department or sector of a business, regardless of size, has an allotted number of resources, these could be financial, business connections, personnel, through to inventory. These subsectors or “pillars” holding up the business are essential to its operation yet what causes them to falter is the mismanagement or poor distribution of the resources within them.
Squandering resources or not using them to their fullest potential or normal purpose is what ultimately creates fissures within the pillars, compromising the structural integrity of the company, soon leading to collapse. So often I see business owners and entrepreneurs with valuable resources; capital, talent, network and the like, but they go either completely misused or neglected all together.
Capital is a prime example, cash is key for every business, large and small, but what the sustainable ones do consistently is allocate it effectively. Successful businesses deploy capital to fill gaps in their business, either with personnel, investment, innovation, research and so on. By contrast, the ones who make mistakes end up deploying capital to things they believe are important or essential to growing their business but either overspend or completely miss the mark. Some common mistakes I see are things like adding excess inventory without adequate demand or bringing on technology outside the scope of their business.
This issue with the misallocation of resources stems from a lack of knowledge or experience. Simply put, people don’t know what they don’t know, yet the way to guard against making these mistakes is through investing in extensive research, seeking advice, running analysis and working to take emotion out of the decision-making process. Advisors, consultants, industry professionals are all there to help give guidance on when and where to allocate resources, it’s up to the business owners to seek the plethora industry knowledge so readily available and implement it.
In summary, a business poised for longevity is one which can demonstrate an ability to market what or who they are effectively and allocate resources within its operation efficiently and effectively on a consistent basis. If you wonder what an investment worthy, sustainable brand looks like, it’s that. Does yours have the ability to operate in such a way?
To gain personalized guidance for your business on this topic and others contact us.
- Vince Calace
Founder - Venture Business Development