Creating a successful, smart business can be challenging. There are many demands, deadlines, and directions that can stretch a business to the brink of extinction. IA Business Advisors has identified 5 characteristics of successful smart businesses.
Characteristic #1: Solution
Successful smart businesses provide a solution to the immediate needs of the user. Before beginning a business with a wonderful solution, make sure the target market has a big enough need to support the businesses revenue and profit goals. We recommend doing a market analysis and writing a business plan. Try to determine the needs as quickly as possible without investing substantial capital. Remember that the solution needs to solve an immediate need. Pivoting from an initial service or product offering to another is important when reviewing the potential revenue from a given marketing penetration.
Characteristic #2: Compensation
Being compensated fairly for a product or service is one of the first steps to becoming a successful smart business. One pricing strategy is to always be the lowest price. Another strategy is to always be the highest price by justifying additional value that a competitors’ product or service doesn’t have. Either way, every business needs a compensation strategy for their product or service. Before being able to identify what pricing approach is appropriate, analyze the offering of competitors who already have market penetration. Standard features or common value-adds become expected by consumers. Pricing above the competition without providing the basic standard features is detrimental and should be avoided.
Characteristic #3: Financials
Developing and maintaining financials are critical to the long term success of smart businesses. Keep finances under control by having a budget and accountability around expenditures. Money management is important as it ultimately determines the success or failure of an organization. Successful smart companies have a proper financial policy. There is tremendous value in working with a professional who can help identify industry norms for income, expenses, and balance sheet management.
Characteristic #4: Cash Flow
Cash flow is the life line for successful smart businesses. Creating predictable streams of income will enable a business to run smoothly, operate effectively, and plan accordingly. Cash outflow is equally important to businesses. Understanding the cyclical nature of cash inflows and outflows gives clarity to a successful smart business. Negotiating the terms of payment to vendors is just one way to manage cash flow and become a successful smart business. Reviewing a budget monthly or weekly allows for predictability to cash flow in businesses.
Characteristic #5: Marketing
Maximizing visibility through appropriate channels is part of a proper marketing strategy. However, before marketing can be highly effective, identify the target market and their needs. Then, develop a value proposition which solves their needs with a clear product or service offering. Finally, test and tweak. There is no one marketing method that is successful across all industries and businesses. Successful smart businesses have developed a marketing strategy with financial transparency. Ultimately, they can easily quantify the effectiveness of marketing by evaluating the return on investing in marketing.
Having a clear solution provided, expected compensation, financial policy, predictable cash flow and marketing transparency are foundational to successful smart businesses. IA Business Advisors has observed, through more than 20 years of business consulting, that businesses who model these five characteristics become financially rewarding.