Understanding What It Takes to Achieve Business Success and Managing Growth
What Does it Take For a Business to Have the Potential to Grow Successfully?
To bring ideas to fruition the starting point of a successful business begins with a business plan. A plan that outlines how the company will achieve its stated vision, and what does success mean for that company, as well as, the steps to get there.
1.The customer gets first priority. The most crucial element of any business plan is identifying who will buy/use your product or service. Understanding what your potential customers desire and what they are willing to pay for it allows a business to plan accordingly building a product or service to meet an unmet need at a price point that provides sufficient margins. The feasible of the business is completely dependent on the customers.
2. Capital in the form of cash, loans, equity or even sweat equity will be required to bring about business success.
3. Strategic Partnership provides complementary expertise that will allow the company to get the trusted help it needs to be successful
4. Legal Rights - protection of property under the law, copyrights, patents, warranties, insurance, licenses, registrations etc. protects the business from theft, financial liability, torts, government fines etc.
5. Reputation - Whatever you do do it well because as the old adage states, "a good name is better than pocket money." In the case of business a solid reputation can ensure long-term success.
6. Persistence - is described as learned optimism, businesses are likely to experience some failures learn from these events acknowledge that a plan is a living document, therefore, make appropriate changes and have at it again and again until you get it right. If you're smart you may even be able to profit from your mistakes.
7. Competitive advantage - a unique feature of a business can help it to rise above the competition and secure customer loyalty.
Do All Businesses Have The Potential to Grow Aggressively?
It is possible for any business to grow aggressively if it is creative enough. Franchising is one of those creative ideas that allow companies to grow aggressively. If each Mcdonald's restaurant only net a dollar a day the company would still generate a tremendous amount of wealth now we know Mcdonald's makes far more than that but it demonstrates the exponential value franchising can add to a business. Endorsements by reputable public figures, an association of experts, influencers, and celebrities can fuel rapid growth. The property rights to an in-demand or necessary product can drive growth. A unique product or service can also contribute to explosive growth. This is why technology companies including fin-tech and bio-tech firms are among the fastest growing companies because they have necessary, unique, and patent protected products and services that gives them a competitive advantage.
Growth Can Truly Be a Double-Edged Sword Bringing Equal Advantages and Disadvantages.
1. Growth can offer the benefit of economy of scale, for example, a company may be able to lower its production cost. However, this could also cause more defective or low-quality products to reach customers costing the company more to fix that situation, pay for returns, restock, resend, and appease customers.
2. Expansive growth may allow the company to become the industry standard because of their name recognition whereas growth can poison the well with a far-reaching poor reputation.
3. Growth can make the company an enviable place to work and give the company the leverage to negotiate better deals and benefits for its employee, however, employees may become frustrated with the environment that such growth creates and it can become too costly to retain or replace employees because of growth.
4. Remarkable growth can provide tentacles and connections to allow a company to settle matters before they become punitive but growth can also provide additional legal exposure to torts, ethical misconduct, government regulation, and fines.
5. Cash is the life-blood of a company and growth can provide a lot of it but growth can also make it more difficult to follow the numbers and a large business is more susceptible to accounting errors than small businesses.
How Can Growth Be Controlled?
To ascertain whether or not a new company's growth is on track the progress of the company must be measured against the strategic objectives outlined in the company's business plan. Growth can be controlled with several tools including promotion, pricing, Human Resource policy, and company structure. Companies can leverage the power of advertising to grow sales revenue, expanded their reach and penetrate new markets. A company can also choose to scale back or limit advertising in order to slow the pace of growth. Price can be used to set the demand for a product or service and can, therefore, be an effective tool in controlling growth. HR policies are also a proven method of controlling growth some companies employ a form of extreme meritocracy known as a "vitality curve," first made famous by Jack Welch a former CEO General Electric. This is where the top-rated employees by their peers receive the biggest year-end bonuses. The bottom 10 percent are fired. The company's structure can also be used to control growth some companies utilize a buy-in clause for the distribution of equity to employees when employees have a tangible stake in the company they are more likely to be onboard 100% which results in higher performance and growth.
Jack Welch: My Greatest Leadership Learnings From a Life in Business
Jack Welsh CEO of GE from 1981 to 2001 discusses how to win in business and management. He shares some of his best ideas, advice, and the mistakes he learned from. The tips he covers include; the vitality curve, how to energize others, screen ideas, manage change, avoid complacency, enhance the people around you and deliver more than expected.
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