This is the first part of a two-part series on growing your business. For more ways to increase your profits, read click here.
Your ability to think, analyze and decide is the key determining factor of your profitability. To help you sharpen this ability, here are some key principles for business success that are relevant and important at every stage of your business life. If ever you aren't happy with the business results you're getting, revisit these key points.
1. The Product Must Satisfy an Immediate Need
The first principle to consider in selecting any new product or service is to determine if it fills a genuine, existing need that customers have right now. A new product or service must solve a problem of some kind for the customer or make the life or work of the customer better in a cost-effective way. You must be very clear, from the beginning, about exactly what your product or service does to improve the quality of the life or work of your customer.
2. Offer Good Quality at a Fair Price
The second principle for business success with any product or service is that it must be of good quality at a fair price. If it's in competition with other similar products or services, it must have what's called a Unique Selling Proposition--one or more features or benefits that make it unique, different and superior to any competitive product or service.
This area of uniqueness is central to success in business. No product or service can succeed unless it's somehow unique and superior to any other product or service that competes with it. There's seldom any opportunity to build a business around a "me too" product--a product or service that's just the same as all the others, where the only difference is that it's you who happens to be selling it.
The safest business strategy is to start off with an accepted product that already has a widespread market and then find a way to improve upon it in some way. Deliver it faster, make it better or of higher quality, or lower the price of the product or service in some way. Instead of trying to invent a new business or industry, start off with a product or service that people are already using and find some way to make it more desirable.
3. Be Careful With Your Money
The third principle for business success is tight financial controls and good budgeting. Successful companies use accurate bookkeeping and accounting systems. They put these systems in place at the very beginning and carefully record penny they spend.
Even the largest multi-national companies--those that do billions of dollars in sales each year--tend to be very careful with their expenditures. They're constantly looking for ways to cut costs while maintaining the same level of quality. They focus on frugality at all times.
4. Cash Flow Is Essential
Especially with a small business, you must hold onto your cash as a drowning man would hold on to a life preserver. Cash is the lifeblood of the business. Cash flow is a critical measure and determining factor of business success. All successful entrepreneurs install careful financial controls and monitor them every day. They carefully consider every expenditure. They take the time to analyze the use of every dollar. They work from detailed budgets and they review them every week and every month.
The basic rule for entrepreneurial success is this: only spend money to earn money. In business there are only two categories: revenue and expense. The basic rule for running your business is "If it's not revenue, it's expense!"
5. Guard Your Cash Carefully
One key to business survival, with regard to your operations, is "frugality, frugality, frugality." Once I worked for a man who had started with nothing and built an $800 million dollar business empire by the time he was 55. I was amazed to see that he ate lunch at a small diner across the street from the office, and drove a used car. He delighted in saving money.
Wal-Mart founder Sam Walton, when he was worth more than $25 billion dollars, still drove his own pick-up truck to and from work. This attitude of frugality from the top permeated every aspect of Wal-Mart all the way down and throughout every department. The practice of frugality assured that the business was profitable, year after year.
6. Maximize Your Marketing
Perhaps one of the most important principles for business success is strong momentum in the sales department. This requires an emphasis on marketing that permeates the entire organization. Everybody must think about selling and satisfying customers all day long.
What's the purpose of a business? Some people say that it's to "make a profit." But this isn't correct. The true purpose of a business is to "create and keep a customer." Profits are the result of creating and keeping a sufficient number of customers in a cost-effective way. All emphasis has to be on creating and keeping customers.
7. Selling Is the Core Skill of a Successful Business
The keys to business success are simple. With regard to the product, the keys are to "Sell! Sell! Sell!" One of the most important single skills you must develop for succeeding in your own business is the ability to sell yourself and your product to your customers.
In fact, the ability to sell is one of the key skills for a successful life. With very few exceptions, all successful businesses begin with a single person who's excited about the product and who's very good at selling it to others. He likes the product so much that he can hardly wait to talk to other people about it. He's eager to make new customer contacts. But where there's no sales expertise, the finest product or service will fail.
Brian Tracy is the "Success Secrets" coach at Entrepreneur.comand one of America's leading authoritieson entrepreneurial development. He's produced more than 300 audio and video learning programs that cover the entire spectrum of human and corporate performance through his company, Brian Tracy International.