For many people, starting and business and then succeeding in that business seems a very ambiguous task; most have no idea how it is done. For those that do understand how to start and succeed a business, the rewards can be great and unparalleled. The truth is that being successful in your own business encompasses only three things: revenue, cost, and capital. These three items are what you need to understand, know how to drive, and be able to change at your will. So if you want to be successful in business, you need to know all about them.
Revenue
Revenue is why you go into business. It is driven by customers and price; the more customers you have, the more revenue you will have. Also, the higher your price is for your product or service, the more revenue you will have. So first, let's focus on customers. You get more customers by doing the right kind of marketing. You may need to consider advertising, partnerships with other businesses that correlate to what you do or that can benefit from what you have to offer. You may need to get an online presence also. Whatever the case may be, you will need to find where your customers are and where they go to look for the kind of product you have to offer. Once you find that out, you will be ready to start attracting them.
Next, let's address price. Pricing is really important for a successfully business. You want to make sure that the price of your product or service directly relates to the value that you are providing. Many people recommend using the market value of related or similar goods and services. However, this is not always as good strategy. You could end up pricing yourself too low for your product, or even too high. Your price should be what you think your target customer is willing to pay for your product taking into consideration the value that you are providing them.
Cost
For any business to be profitable, you have to keep your costs low. Before you get your hopes set to high on whatever business you are going to get into, you need to figure out if it is feasible. Talk to your potential supplier and really get a good feel for what it is going to cost you to produce you product or service. Discover if there are bulk discounts; you will also want to shop comparatively. Use this as negotiating room to get your suppliers to lower the price. Even small decreases in the cost to you can make a huge difference in your bottom line. Sometimes you may have to think outside of the box when creating your product or service. Doing things differently may offer you more cost benefits as well.
Capital
Many people underestimate and overestimate how much capital they really need. It is recommended that most start up businesses need 18 months of operating money to get started. This may sound like a lot but depending on the kind of business you go into, it may not be very much at all. For example, if you start an online business, you may only need as little as $5,000- $10,000. If you are starting a software company, however, you may need upwards of $1,000,000 to fund properly. The right financing will make or break your business, so make sure you understand how much you are going to need; that way you get it right the first time. Otherwise, you will be 8 months into your venture and have found a real opportunity for success but be missing that key factor: money.
So before you go into business, consider these three items. Make sure that you take the time to plan. Business plan can be a great place to start, but the real key is that financial plan. So make sure you understand the money, otherwise you won't understand how to get it!
By Sheila Dollarsby
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