6 principles of successful businesses

Although there is a range of factors that can contribute to the success of the business, the content below will outline a summary of key factors that have consistently proven to help businesses succeed.

1. Identify a relevant need or demand

Without a need for what your business can offer, there is very little point in pursuing the idea.

When James Dyson invented the bagless vacuum cleaner, he did it because he became frustrated at having to purchase vacuum bags. The bagless vacuum was his solution to save money and time vacuuming.

2. Passion

You need to be excited in some way by what you are doing, as this will motivate you to drive the business forward.

Bill Gates was fascinated by computers and programming and this is what led him to build one of the biggest corporate empires we have ever known.

3. Maximise profits

Ensure that you have a good understanding of costs, supplies and affordability so that you can efficiently produce and sell your products.

The wholesaler Costco only stocks a few hundred products compared with the tens of thousands that supermarkets have on display. This allows Costco to generate economies of scale and pass on the savings to customers whilst still generating large profit margins.

4. Understand your customer

It is important for customers to build a relationship with the business if the business is to enjoy its loyalty. This comes from knowing your customers and being able to respond to them effectively.

Loyalty card schemes such as those used by retailers are a really good way of understanding not just what your customers are buying, but also when and how much of something they purchase.

Google has an extensive understanding of its users and can customise content and advertising to complement the user experience. As a result, it is one of the most successful and profitable companies in the world.

5. Have a clear sense of direction

It is important that your business understands where it needs to go strategically. Effective planning and goal setting will help to ensure the business has clear targets for growth.

PepsiCo realised many years ago that they could not depend on soft drinks alone and therefore, decided that they needed a focussed strategy to diversify into other areas of food and beverages through acquiring and developing brands such as Doritos, Gatorade and Quaker’s.

6. Innovation

If your business does not innovate it will get left behind. One good idea will get you customers, but several ideas will retain and grow that customer base.

Take Amazon for example. They began as an online bookstore but innovated the shopping experience for consumers and integrated it with their TV service and created an ecosystem of products that function seamlessly with one another.