Starting a company is always a risky proposition, with no guaranteed return on a substantial investment of time, energy and money. According the business consultants SCORE, only about half of small businesses that hire employees are still in existence after five years. Yet, there are a number of factors that companies can concentrate on to better their chances of success.
One of the most famous adages about starting a business is that a good entrepreneur should find a gap in the market and fill it. All new companies must be able to offer consumers something that they do not already have. If the product is similar to that offered by competitors, some element of its delivery must be new, such as its location or marketing. Without an innovation, consumers will have no compelling reason to purchase it.
One of the prerequisites to a customer purchasing a good or service is knowing that it exists and feeling motivated to buy it. To be successful, a company must be able to inform the right group of potential consumers of its product and provide them compelling reasons why they should purchase it. Marketing can take infinite forms, from a sign hung in a front window to a nationwide television campaign. Each company must find the form most suitable to what they are selling.
One of the main factors that separates successful from unsuccessful companies is efficiency. Because many businesses have a profit margin in the single digits, they must be able to minimize costs and maximize productivity in order to survive. Knowing where and how to cut fat is critical to keeping a business alive.
Markets seldom remain constant for very long. Consumer demand can change, new competition can develop and suppliers can shift their offerings. This means that businesses, even in relatively staid industries, must be able to adapt and modify their products and services to match these changes. A business unable to change will find itself quickly obsolete.
At bottom, nearly all companies, even those that only manufacture products, are in the business of serving customers. Save for those few businesses that enjoy a monopoly on a particular good or service, all companies must be responsive to customer needs. Good companies are those that are able to identify what their potential customers want and provide it to them. Once they have secured a customer base, they must be able to maintain that relationship and build mutual trust and loyalty.
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