Starting a business may seem to be very easy. However, it may be difficult to achieve and maintain business success in the long run without developing a proper business plan and appropriate business strategies. It is important for the entrepreneur to monitor changes in internal and external business environment.
Further, it is the responsibility of company’s management to ensure that customers are provided with high quality products and services. Attracting new customers while retaining existing customers is important for any business to grow and survive in the long run.
Five Components of a Successful Business
Properly Developed Business Plan
It is important for any company to develop a proper business plan for each year. A business plan can be used as the basis for undertaking various business activities. It is important to define the roles and responsibilities of key employees in the business plan. Involvement of management in the development of business plan can help in ensuring that the business activities (proposed to be undertaken) and strategies mentioned in the plan are appropriate and approved by the management.
Retention of Customers
With increase in competition, it is important for any company to retain its existing customers. It is essential to undertake market research (from time to time) in order to understand changes in customer tastes and preferences. Further, proper market research may help the company in understanding the marketing and pricing strategies of its competitors. In addition to market research, feedback from existing customers can also be used as a means for improving products/services. Focus on providing excellent after sales services can also help the company in establishing healthy relationship with its customers.
Arrangement of Funds
It is practically impossible for any business to survive and grow without money. Therefore, it is important for the management to develop appropriate financial strategies in order to meet its day to day working capital requirements and growth/expansion plans. A company’s capital structure should comprise of an appropriate mix of debt and equity. It is important to understand the costs and risks associated with each form of financing. For Instance, too much debt in the capital structure can increase business costs in the form of interest expense.
The success of any organization depends on its workforce. It is important for a company to hire qualified and trained employees to manage its business processes. Timely execution of key business operations (such as processing of a sales order) is important to meet customer requirements and enhance customer satisfaction. In the absence of skilled workforce, it may be practically impossible to monitor execution of day to day and key business activities.
Compliance with Laws and Regulations
Compliance with relevant laws and regulations can be considered as one of the most important aspects of operating any business. It is important for a company to obtain proper licenses and certifications (required to carry out business operations) from relevant government authorities. It is the responsibility of company’s management to ensure that financial statements are prepared and audited on a timely basis.
Further, company’s management should ensure timely deposit of tax and submission of tax returns. While all these actions may not have a direct impact on company’s sales, any kind of non compliance can have serious repercussions which may even extend to company’s dissolution.
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