Various researchers over the years have developed models for examining businesses. There appear to be eight factors that influence business growth, and determine ultimate success or failure.
Anyone who has studied the ecosystem of a business can attest that a business goes through different stages in its lifecycle. A business, much like a human being goes through a stage of birth, growth, maturity and decline.
My specialty and the focus of my business coaching practice is in the start-up and growth stages of business. Over the past many years, I have evaluated hundreds of companies and their business owners, and have discovered a number of patterns and similarities amongst those who are able to take their business into a profitable and sustainable position to those who cannot move beyond the survival stage, and many more who don’t advance beyond start-up – and never will. My coaching model holistically addresses the needs of both the business and the business owner, for best results.
Research available in articles written in publications like the Harvard Business Review tell us that while small businesses vary widely in size and capacity for growth, business models, organizational structures and management style there are a set of common problems that arise at each stage in a business’ development.
The health of your business, and what you need to focus on largely depends on which stage you are in the lifecycle of your business. (Read more about that in my blog: Four Keys to Unlocking Business Growth, with Less Struggle.)
According to the Harvard Business Review, there are eight factors that determine the ultimate success or failure of your business.
How well do you stack up against these ‘must-have’s?
Company Must Have:
- Financial Resources, including cash and borrowing power.
- Personnel Resources, relating to numbers, depth, and quality of people, particularly at the management and staff levels.
- Systems Resources, in terms of the degree of sophistication of both information and planning and control systems.
- Business Resources, including customer relations, market share, supplier relationships, delivery processes, technology and brand reputation, all of which give the company a position in its industry and market.
Owner Must Have:
- Goals for himself or herself and for the business.
- Operational Abilities in doing important jobs such as marketing, innovating, producing, and managing delivery channels.
- Managerial Ability and willingness to delegate responsibility and to manage the activities of others.
- Strategic Abilities for looking beyond the present and matching the strengths and weaknesses of the company with his or her goals.
As a business moves from one stage to another, the importance of the factors changes.
In the early stages, the owner’s ability to do the job gives life to the business. The owner’s talents, including the ability to produce, sell and deliver their product or service are critical to survival. Financial resources are extremely important at the start and in the growth stage.
Most business owners fall short in balancing the amount of cash they need with the time it will take to move from start-up to survival, when the business is able to fund itself. Running out of personal cash reserves (or leveraged cash) leads to the failure of many businesses.
Matching business goals to the owner’s personal goals is also a crucial component in the start-up stage because the owner must recognize and be reconciled to the heavy financial and time-energy demands of the new business. Lack of experience can impact unrealistic expectations, and as a result some find these demands more than they can handle. This can lead to a great deal of stress, overwhelm and eventual burnout.
As the company grows, the owner must spend less time doing and more time managing people and resources – increasing the amount of work done through other people in order to grow beyond the owner’s singular capacity. The inability of many founders to let go of doing and to begin managing and delegating explains the demise of many businesses.
The issues of people, planning, and systems gradually increase in importance as the company progresses from slow initial growth to rapid growth. Systems create efficiency and predictability, while strategic planning lays the groundwork for a proactive and thoughtful approach to establishing priorities and action-steps based on measurable goals and objectives.
Anybody can start a business, but statistics show the start-up failure rate of a new business is high; only 50% of businesses succeed in the first five years.
There is both an art and a science to growing a business. It’s very difficult to see clearly when you are stuck in the weeds of day-to-day operations, and you don’t know enough about how to grow a business. If you want to be a top performer, you won’t make it trying to do it alone.
When I work with my clients to help them navigate their business growth to multiple six and seven figures, I assist them in transforming their big-picture vision into an operationalized strategic growth plan with quarterly management accountability plans that guide big rock initiatives toward tangible goals. I offer personalized guidance to help them focus on the right things that will lead to growth, profitability and sustainability.
If you are committed to taking your business to the next level and know you need some help, I invite you to apply for a complimentary discovery call with me. I will help you uncover the strengths and gaps in your business model, marketing and sales plan, and provide you with a roadmap for predictable growth.