Every day business owners ask the question ‘what makes a great business and what do I need to do to move from good to great?’
The recipe for a great business is not about industry, size or location; it’s about a series of winning fundamentals that define all great businesses. Let’s have a look at them:
The business’s leadership can see where the business will be in three to five years. They understand their market and position the business for the future. In many cases, they are market leaders and they drive the direction of the business.
2. Leadership & drive
The owners are true entrepreneurs. They lead and drive the business. Their energy is contagious and their team is excited to be part of the business.
They have carved out a point of differentiation for the business. It is meaningful, sustainable and easily articulated. Their differentiator immediately separates the business from its competitors and provides the business with a sustainable competitive advantage.
4. Market presence
Great businesses have market presence. This does not necessarily mean that they have great marketing or are necessarily spending large amounts of marketing. They may drive their business off a very small customer base that produces substantial revenues. Or, they may be highly visible through their marketing efforts. The key is they understand their market intimately and do what is necessary to position the business in that market.
The business has developed beyond the owners. It is sustainable through the strengths of a great group of people who bring together a mix of skills. In part, it is great because of the fusion of these skill sets.
6. Strong financial management
The business operators know their numbers and actively manage them. There are few surprises. Most of what happens is predictable. They manage the ‘health & hygiene’ financial management well and have lead indicators in place that provide early warning signals for any problems that might occur. These lead indicators are in carefully chosen KPIs – generally seven at most, that provide management with essential performance information on the business. They are supported by strong operating budgets, cash-flow forecasts and a strong follow-up system. Stock, debtors, debt and cash all have clear target positions and are actively managed.
7. Great reporting
As focussed as they are on growth, they maintain strong corporate governance and a reporting system that meets the needs of all stakeholders. Generally, this will include regular monthly and quarterly updates, a comparison to forecasts, and the resetting of latest period estimates that balance the past with the future.
8. Sustainable business model
Not just a good idea, not just passion and energy, not just hard work and commitment, great businesses have a sustainable and profitable business model. They bring together all of the elements required to produce a great result in a consistent business format. They have thought through what is required for success. Their focus is on outstanding performance and they will accept nothing less.
9. Operational fulfilment
Great businesses deliver. Others have good ideas or can sell well, but without the ability to deliver, the business is going nowhere. They have worked out what is required and have a strong fulfilment system in place.
10. Adequate capital
They understand how much capital is required and have worked out how to put that capital in place. The owners are prepared to leave profits in the business and manage cost structures down to allow the business to grow and develop. They know how to feed the business.
If you want to know more about how to become a winning business, talk to us today.