Innovate—don’t rest on your laurels
The most successful businesses are more innovative in a variety of ways, the BDC study found.
They offered new products and services more often.
They adopted new technology more quickly.
- They reported that innovative practices—ranging from improving internal processes and enhancing internal efficiency to adapting their business model—were more important to their firm’s success than did their counterparts.
Ask for outside advice
Simply put, it’s virtually impossible for you and your team to have the best knowledge in every situation.
The most successful businesses were more likely to report seeking outside advice through such means as forming an advisory board or using external consultants. Another recent BDC study this one on advisory boards—found they produce huge benefits for small and medium-sized businesses, including substantial gains in sales and productivity.
Have a solid plan and measure your progress
Where do you want your business to be in five years? How will you get there? How will you monitor your progress? The most successful businesses are far more like to have a concrete medium-term plan and follow their progress with multiple business performance metrics.
Do # 4
Hire the best and keep them engaged—it takes more than money
Over 60% of the most successful firms were willing to take several months or longer to find and hire only very strong candidates for key roles and positions, compared to just over 40% of their counterparts. The most successful firms also believed they offered superior pay and benefits, a more stimulating work environment and a more positive company culture than their competitors.
Build strong relationships with your key suppliers
The most successful companies reported that several types of relationships were important to their success. However, they ranked supplier relationships as by far the most important.
The 5 don’ts
To compile a list of don’ts, BDC closely examined 118 established companies from its portfolio that had run into financial difficulty.
Don’t rely on too few customers—diversify
Nearly one in six firms examined by BDC ran into trouble, at least in part, because they lost a single major customer.
Don’t underestimate the importance of effective financial management
A lack of financial management expertise is probably the single most common factor that causes otherwise successful firms to run into difficulties. Effective financial management requires two things: the right knowledge and the right tools. To get started, download our free eBook Master Your Cash Flow: A Guide For Entrepreneurs.
Unforeseen events such as the loss of key employees, increases in the cost of raw materials or a disaster such as fire or flooding were a surprisingly common source of problems for firms that encountered financial difficulties.
In fact, nearly one in three fell victim, at least in part, to circumstances that were initially out of their control.
Don’t ignore what’s happening in your market
Businesses have always had to adapt to evolutionary change as production techniques and consumer preferences evolved. In recent years, rapid technological changes and globalization have made revolutionary change increasingly common. Failing to adapt can cause businesses to flounder.
Don’t wait too long to get help
No matter how capable you are as an entrepreneur, financial difficulties can happen. In most companies, early action can lead to a successful turnaround. You need to understand the value of being honest and transparent with stakeholders. Restructuring often entails seeking financial assistance from stakeholders, including bankers. They have to believe in your ability to live up to your end of the bargain so you have to be upfront with them.
The full report The five dos and five don’ts of successful businesses includes key strategies to achieve each Do and avoid each Don’t plus the stories of successful entrepreneurs. Download your free copy.