What determines business success
When creating a business, every entrepreneur dreams of becoming successful, but not everyone succeeds. In this article, we will try to understand why this happens and what the success of entrepreneurial activity really depends on.
The history of the emergence of trade and entrepreneurship
The prerequisites for the development of trade arose in the Stone Age, when there was an exchange of food and tools. Today, archaeologists find tools, jewelry or various products, which are used to judge the passage of certain trade routes.
It should be noted that with the division of labor, people first exchanged what they produced, and with the advent of money they began to buy and sell the necessary goods.
The same applies to entrepreneurship; thinkers tried to comprehend it even in antiquity.
- Xenophon, who lived around 430-354. BC e., in the work "Domostroy".
- Plato, years of life: 427–347 BC e. His thoughts are reflected in the works "Laws", "State".
- Aristotle, years of life: 384–322 BC e. His famous work on this subject is Politics.
Trade and entrepreneurship actively developed with the advent of the Old Russian state in the 9th century. The fact is that it was formed from the unification of the East Slavic tribes, and trade for them was one of the important occupations. A variety of goods were concentrated mainly in cities in Russia, and trading settlements grew around the cities, where merchants, beekeepers, trappers and others gathered. Interestingly, all strata of society, including princes and boyars, participated in entrepreneurship. There was trade with the Varangians.
There were also documents that regulated business relations, namely: the code of laws "Russian Truth", the "Charter" of Vladimir Monomakh, which appeared with the development of credit relations.
Later, the sphere of activity of merchants and entrepreneurs only increased, moreover, favorable conditions for the development of entrepreneurship were created during the time of Peter I. He adopted the ideas of mercantilism in the West, which said that every nation should produce everything for itself in order not to become poor, and also to sell products of their labor to enrich themselves. And then he reformed the spheres of trade and industry in order to introduce them.
After the events of 1917, the development of private trade was suspended due to the negative attitude of the Soviet authorities towards it, however, since the 1990s. new private enterprises began to appear.
What qualities does a businessman need
You can list for a very long time the value and moral and ethical qualities that help entrepreneurs achieve success in their activities. The main ones are:
- initiative, the desire for innovation and the search for new products, as well as ideas for their creation and improvement;
- strategic thinking (it is important to see goals and strive for them, develop concepts for the development of the company, be able to draw up short-term and long-term work plans, as well as engage in financial planning in order to properly distribute profits and always have resources for development);
- self-discipline, diligence;
- intrinsic motivation and motivation for success;
- the ability to be a leader (that is, to remain active all the time, to control work, but not excessively so as not to suppress the initiative of your team members, it is also important to be able to delegate tasks to employees and create conditions for them to successfully grow and develop; after all, business leads to the success of the team, but here it is still important to correctly select and select personnel for the organization);
- the ability to establish contacts, find a common language with potential and established partners, with employees;
- faith in a positive outcome.
Some researchers note other important qualities of an entrepreneur, on which the success of his activity depends. First of all, focus on people (it is important to act in the common interest, listen to the opinion of the team). Also important are patience and perseverance in the implementation of plans and a willingness to learn all the time and introduce new technologies and methods into your work, even if you have to take risks.
How to choose a business you like and make it your business
To help with the choice, psychologists ask their clients one question: “What would you do if you already had everything: a nice house, cars, travel, opportunities, a lot of money?" Answer it honestly and draw your own conclusions.
There are other options.
- Thinking about what brings pleasure helps relieve fatigue after a busy day. Most often, this is a hobby: sewing, knitting, online shopping, drawing, etc. They can be monetized. The main thing is to look at things more broadly. For example, a person who can draw will be able to realize his potential not only as an artist, but also as a graphic designer, illustrator, web designer, interior designer, fashion designer, restorer, production designer, calligrapher, cartographer… The list goes on and on.
- Think about the problem you most often face and try to solve it. So, mothers on maternity leave often launch their own lines of children’s clothing or toys, furniture for children if they cannot find products that suit them in terms of price and quality. But when launching such a project, it is important to objectively assess the prospects for its development: whether there will be demand for the product, whether the investments will pay off.
- Think about what you can do really well, what you consider yourself an expert in. Knowledge and practical experience are always highly valued, especially if they are in demand.
Another way is to regularly review market trends. Perhaps the currently developing area is exactly what you were looking for.
The concept of key success factors (KSF)
When thinking about starting your own business, take into account the main factors for the success of a business in a particular area. Usually there are several of them, but their influence is noted by the owners of all companies in the industry.
The KFU methodology was developed by R. Daniel, director of McKinsey & Company, in 1961, using it to explain the mechanism for achieving success by companies and divisions. According to Daniel, key success factors are areas of activity, focusing on which, you can become competitive and successful.
There are 4 common factors for all areas:
The rest depend on the field of activity of the company.
Main Types of Key Success Factors
Although each area is characterized by a number of factors, the most important will be only 1-2 of them. The task of the leader is to identify them. By the way, the definition of key success factors is one of the stages of managing business processes in an enterprise and assessing their importance, taking into account strategic goals.
- KFU in the field of technology:
- experience in the implementation of scientific research;
- the degree of mastery of innovative technologies;
- the ability to quickly implement technological solutions and innovations in production;
- experience with advanced technologies;
- Experience in developing innovative products.
2 KFU in the field of production:
- the ability to reduce the cost of production, thereby saving on production;
- product quality (defect minimization, on the one hand, and durability, reliability, on the other);
- efficient use of production capacities (especially in capital-intensive industries);
- favorable territorial location of the enterprise (due to this, it is possible to optimize the costs of transporting goods);
- the availability of skilled labor;
- high labor productivity;
- established relationships with suppliers;
- flexibility in work and the ability to produce goods of different sizes, models (to meet the needs of as many consumers as possible);
- the ability to take and fulfill orders.
3 KFU in the field of distribution:
- own well-established distribution network or well-organized cooperation with partners with an independent distribution network;
- access to retail outlets;
- availability of own points of sale;
- the presence of a qualified team involved in the sale of goods;
- accuracy, responsibility in the execution of orders;
- fast delivery;
- low costs for organizing the sale of goods.
4 KFU in the field of marketing:
- qualified team;
- a wide range of goods, groups of goods;
- the art of sales;
- guarantees for buyers (especially in the field of e-commerce);
- reliable and stylish packaging;
- timeliness and accuracy in the execution of orders (so that there are fewer returns).
5 KFU in the field of skills:
- recognized talent;
- knowledge of production secrets;
- the ability to develop an unusual and attractive product design;
- promotion skills, creating effective advertising;
- the ability to quickly transfer a product from the development stage to production.
6 KFU in the field of organization:
- the ability to quickly respond to changes in the market and make quick decisions (introduce new products, improve existing lines, etc.);
- vast experience in management;
- availability of proven and effective information systems (especially in the areas of air transportation, hotel business, etc.).
7 Other types of CFU:
- availability of patents;
- good staff;
- access to financial capital;
- minimum costs;
- good location (particularly for retail).
How to determine the CSF of a particular business and use them in practice
In order to identify key business success factors, it is necessary to organize a strategic session with the participation of company managers involved in planning. Then invite each of them to complete the sentence: "For our company to be successful, it is important for us to be especially good at doing …". It is necessary that the participants have time to think about the answer, and have the mission of the company in front of their eyes.
After that, everyone should speak: read their answer and argue it. Answers can be written down on a flipchart. The next stage is the selection of 2–3 KFU. Perhaps this is the most difficult step, since it is important to focus on those areas of the business in which the company has already achieved high results, since they can lead it to success.
The final stage is a SWOT analysis based on the identified key success factors. It is important to write here:
- strengths of the business that distinguish it from competitors;
- weak, making the company vulnerable;
- opportunities that she can use;
- threats that could harm her.
Based on the results of the analysis, strategic planning should be carried out and the planned tasks should be implemented.
Teamwork, or what else determines the success of entrepreneurial activity
Success in business depends on the team. In it, each employee performs his own function, but together they solve important tasks that contribute to growth and development. By the way, the performance of the team depends on the weakest player, so you should always choose your staff carefully.
Rights and obligations of a team member
The work of the personnel is organized and evaluated taking into account the rights and obligations.
Responsibilities of each team member:
- to direct their forces, capabilities, competencies towards the achievement of common goals;
- be able to obey the decisions of the majority, even if he does not agree with them;
- remain loyal to other team members, be patient, respect them, try to build business relationships with them.
- speak freely, share your thoughts about the difficulties that have arisen;
- be informed about the work, be always aware of changes;
- require compliance with the principles of correctness in behavior;
- demand confidentiality of information expressed by him in the process of work.
Responsibility when working in a team
It is important for all participants to respect team decisions, this is one of the success factors of a team in business. That is, even if someone spoke out against a decision, but it was adopted by the majority, the whole team should be responsible for the result.
- on disputable situations, decisions should be made by the majority, at the same time, the opinion of the minority can be recorded in the minutes;
- if at the same time the members who spoke in the minority consider the decision made a mistake, they must tell the rest of the participants about it, and then the leader will make the final decision, perhaps he will even divide the teams into two, each of which will move in its own direction;
- the team leader has double responsibility, he is responsible both to his team and to the customer;
- within the organizational structure, a separate team can be created to solve individual problems, which will then be disbanded as soon as the goals are achieved.
Successful team in the virtual space
Efficient work on a virtual platform can also be organized. The main thing:
- assemble a small team (of 2-3 participants), if there are more of them, the process of agreeing on ideas will be delayed;
- if people work together, form teams from them in the future;
- correctly distribute work between participants, and not dump all tasks on one;
- do not rush the team working on the project (people should have time to think through the details, deal with unforeseen circumstances).
And it is necessary to learn from the experience in organizing work from more effective employees.
Advantages and disadvantages of teamwork
Teamwork is always more efficient than the work of one person, since together you can complete a large project on time or find a solution to a non-standard problem, taking into account different views, ideas, especially since this also reduces the risk of choosing an erroneous decision, including that provoked by “industrial blindness” .
It is worth noting that when working in a team, employees cultivate positive qualities in themselves, such as: tolerance, mutual respect, loyalty to others, and can also acquire some skills in related professions.
But there are also disadvantages:
- additional time costs, especially when the team has just formed;
- slowness in decision-making, especially in large teams;
- the risk of discussion;
- anonymity of the results of labor (some will hide behind it, others will not receive personal encouragement because of it).
Finally, if employees have many responsibilities, bringing them into the team can make the workload overwhelming.
Small business in foreign practice: features and distinctive features
In favor of the decision to organize your own business, I would like to mention the experience of developing small businesses in other countries. So, in the West it is the largest producer of goods and services. It should, however, be noted that it began to develop there much earlier, for example, in the USA – during the Great Depression. By the way, the US also has its own system of criteria that classifies enterprises as small businesses. It all depends on the area in which it operates. In some, the decisive factor is the number of employees, in others – turnover, profit.
In Spain, small business has been actively developing since the 1970s, so in certain areas, for example, in agriculture, the share of such enterprises reaches 80%. This is largely due to support and development programs.
Entrepreneurship can be made successful. The main thing is to develop in yourself the qualities that are important for a businessman, find a job you like, turn it into a business, and then take into account the key success factors in your field and use it in your work.
Another important point is the team. We must be able to select people and coordinate their actions in order to reach the goal together.