We are reminded on a regular basis that more than 50% of businesses fail in the first 5 years and only 10% make it past the 10-year marker.
As a business owner in year 4 of trading – and with a failed retail franchise under my belt – the odds aren’t in my favour. I should probably pack up now right? Wrong.
I’ve learnt the hard (headed) way how to succeed and grow, and my sights are firmly set on the 10 year milestone.
I’ve been fortunate enough to have the benefit of hindsight through my work outside my own company. I am fortunate enough to be in a position where I assess business ideas and scalable ventures on a weekly basis as a board member and trustee of UnLtd, The Foundation for Social Entrepreneurs and Wayra UnLtd. I also have the benefit of working in and with businesses large and small.
I take a keen interest in how successful business become just that, successful. Through growth, investment and innovation. There are six things that I’ve found make the different in terms of creating long lasting business growth.
1. Business owners should move from operational management to executive management by year 3. Years 4-6 get someone else to run the business, they’ll do a better job. In pitches you can always tell when a founder needs to be replaced with a CEO or MD. The businesses that make it long term are run not by the people that started the venture but a more proficient and strategic person or executive team.
2. Your executive team should be high performing and forward-looking all round but the most important people on the team aren’t the ideas people it’s the legal, operations and finance controllers. The ideas people get the love and limelight but what keeps the ship running is operational efficiency.
3. Continually evolve your product or service. Remember that your product or service could be made obsolete at any time through external factors not in your control. Always be one step ahead of today so you can handle any storms that are brewing tomorrow.
Some people might call it innovation; I call it not resting on your laurels. There is always someone waiting in the wings to steal your market share and a crisis for you or your industry is usually the best time to swoop.
4. Implement a board and give them a remit to ensure the business succeeds, with or without you. Having specialist brains steer the business is, if done correctly, like having eyes in the back of your head, a Captain America shield and [insert your desired superpower].
5. Manage your money on three levels, daily cashflow in and out. Quarterly expenditure and profit or loss and yearly targets (I prefer to substitute the word projection for target) based on robust modelling and your actual operational activity.
If your team have KPIs to make £1.2 million in revenue at the end of Q4 then your forecast should be a direct reflection. I’ve reviewed countless projections based on little more than what a business would like to turnover and not what they have actually set their teams up to achieve. Sounds obvious but you’ll be surprised at the lack of real intel behind financial projections.
6. Create a brand and culture. This might seem like the most fluffy of the six points but take a look at the most successful businesses out there right now. Strong brands with very strong cultures. Your teams, employees, clients and customers buy into both at a subconscious level which create brand equity and a loyalty that provides a financial return.
High performing teams are more productive. Happy, bought-in clients and customers spend more or give you repeat business. Virgin Media were our first client and they are still with us. We’ve been working with M&S for nearly two years and a one off project at Channel 4 has become a year-long project with an even longer legacy and partnership.
Natalie Campbell is founder and director of A Very Good Company. Her new book, Starting a Business in 7 Simple Steps, is out now.
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