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Tuesday, August 2, 2011

How to Start and Grow a Successful Traditional Business


How to Start and Grow a Successful Traditional Business

Starting a business could be challenging, daunting, and above all an exciting and rewarding experience. Let us suppose that you have a promising idea, and the entrepreneurial attributes to launch a new business. What factors must be considered? To start a business requires careful reflection and decision making about the following:

  •  Business planning
  • Business financing
  • Employees management 
  • Customer orientation (Marketing)

All of these factors, though, are important in starting and growing a successful business, but the first two factors (planning and financing) are of primary concern (especially) during the start-up phase. The rest three are at the core of actual running and managing of the on-going business.  A number of professional literatures extensively treat this subject, for example Understanding Business . The section that follows briefly sheds light on these factors.

Business Planning

It is an often cited remark that ‘‘He who fails to plan, is planning to fail.’’ Yet, it is surprising how many aspiring entrepreneurs are anxious to start a small business   but have only a vague notion of what they want to do.  Simply put, planning your business means thinking ahead, and relating the possibilities of the future to the realities of the present and past things. The work of thinking things through   is expressed in a final document called a business plan.  It forms a framework for you to start and grow your business.

Most scholars and practitioners have agreed that ideas are a person’s greatest asset.   And it is common experience, among entrepreneurs, to come up with ideas for business and start sharing the ideas with friends and other business people as well as with Professors.  Joseph Cossman, a celebrated entrepreneur, cautions that:
Most of our products are the result of our own ideas. In the long run you are on your own, so let your judgments be your guide. But keep this in mind…. A new idea is a delicate thing. It can be killed by a sneer or worried to death with a frown. Treat your own ideas like children – coddle them, keep them away from the chill of adverse criticism, have faith in them and – they’ll grow up into strong, mature products to support you in your old age..

The idea generation/formulation phase is crucial to successful business planning as it is with other human activities. Ideas are man’s greatest asset more valuable than even capital and experience.

We have emphasized that planning your business is of primary concern in starting and growing a successful business. The primacy of idea was underscored. 

Financing your business is also of importance.


Business Financing

Entrepreneurs, like most people, require money in starting and growing successful businesses. Sources of business finance include – personal savings, bank financing, relatives, former employers, government agencies, and lease-purchase agreements. Investors such as Venture Capitalists and Angels may also fund your project. Entrepreneurs must not only be well informed in identifying and securing start-up capital, but they must also nurture a profit-orientation.

Ability to balance profits and expenses to attract customers is vital to business success.

Customers Orientation (Marketing)

In business, opportunities exist in the market. And one of the most important elements of starting and growing a successful business is:  knowing the market. A market comprises people with unsatisfied wants and needs who possess both the wherewithal (resources) and the desire (willingness) to buy.  In marketing terms, the key to spotting or perceiving a potentially successful venture is to find a need in the market, and look for ways to meet that need.

For an entrepreneur to spot a genuine need s/he has to listen to people (potential customer) for obstacles that prevent them from completing specific tasks, and listening to what potential customers say frustrate them.  These are first hand avenues to learn what people really need and might potentially buy.  

Another means for an entrepreneur to meet the customers’ needs is to offer top quality products or services.  Concerted efforts should be aimed at meeting or exceeding the customers’ satisfaction. This way, you not only win customers but also keep them. This translates into repeat purchases and attendant profits.      
 

Employees Management

In the course of business growth or expansion, it becomes imperative that the entrepreneur can no longer go solo, and sustain growth and profits. It becomes impossible for him to oversee all details, regardless of the entrepreneur’s commitment in time (resource).  Consequently, he has to recruit, retain and reward employees.  Managing employees, the most valuable of all organizational resources, is tough.  People have varied orientation and backgrounds, among others.

In recruiting, the entrepreneur should consider promising individuals whose visions are aligned or as close as possible, to the enterprise’s vision. We suggest some attributes to look for:  honesty, willingness to learn (humility, as opposed to corporate hubris), and commitment.

It is not enough to hire top talents, qualified or trainable individuals; employee’s relations is important. The entrepreneur should endeavor to make his employees’ work more challenging; their ideas more accepted, and above all, treat employees more respectfully. This way, they are more often satisfied in their work.  Employee satisfaction with their job almost always brings about improved performance/productivity. The entrepreneur will also do well if he influences the discretionary efforts of his employees.  In addition, Nickels and his colleagues argue that entrepreneurs can best serve themselves and the business if they gradually recruit and groom employees for management positions. This will foster loyalty between the manager and other employees, and among themselves.


Keeping Records

The importance of records keeping to the effective operation of businesses – small or large cannot be over-emphasized. It is good for the entrepreneur to follow good financial procedures. This means you must know something about accounting to understand the language of business. The entrepreneur should follow the rules of business; have control over financial standards, cash flow, return on investment, among others. The point here is that nurturing an effective accounting system early will check against probably losses or failures later.

The entrepreneur might hire the services of a good accountant who sets up such effective accounting systems and shows the entrepreneur how o keep the system operating unhindered.  It is also important that the entrepreneur, as with other business persons, is able to read, understand, and analyse accounting reports and financial statements, so as to run the business effectively.

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