How to Make a Successful Business
In this article I will present a list of characteristics I think any successful business must have. First determine why you’re starting a business, and then start exploring exactly how to make a successful business.
Characteristics of Business
My business will have specific characteristics that directly correlate with my reason for starting this business. As a reminder, I am starting this side business so I can become a host of an animal show. Because of this, I want my business to give me financial freedom and time to pursue my goal. Therefore, I want my business to include the following characteristics:
- Self Removal
- Location Independence
I have incorporated these characteristics in all of my past side businesses.
1. Self Removal
This is the most important characteristic of my business. Without it, my business is not truly a business – it’s just another job. A true business will function and maintain profitability regardless of my day-to-day involvement. A true business will make me money if I spend all day working or all day at the beach. A true business will not experience negative consequences when I remove yourself from daily operations.
Self Removal does not mean I will never have to work at my business. I am a business owner, therefore a problem solver. As long as I own this business – I will have to solve problems.
Self Removal isn’t a characteristic my business will have from day one. Self Removal is a milestone that is achieved after I have put in the work to make it happen. You can rest assured that I will be documenting exactly how I will be removing myself from my future side business.
Scalability refers to how easily the business can expand. Some businesses are difficult to scale – meaning that the costs and work needed for growth outweigh the potential financial return. An example of a business that could be hard to scale is a personal fitness training company.
If I started a personal training company and I was the only personal trainer – I can only make money . What happens when you have more clients than you have time? You loose potential income. Plus, you are only making money when you work. This does not allow you to remove yourself from the business. So, when setting up a company like this, you have to prepare to scale – which could mean hiring other trainers (before you actually need them) or selling DVDs of your workouts. I hope that my future business can scale easily from the start.
Self Removal and Scalability are not possible without automation. Automation allows us to remove ourselves from day to day operations and take on growth with ease. To automate the business I will be utilizing technology and outsourced labor.
4. Location Independence
Location Independence means that I can run my business from anywhere that has an Internet connection. This also means that I can run my business from my smart phone. This is important to me because I travel a lot and if I have to move – I don’t want to loose the business. I should be able to run my business from my house as easily as from India.
Two More Business Characteristics!
For the Public Side Business Project (PSBP), I am adding two other characteristics – Large Profit Margins & Passion!
5. Large Profit Margins
Profit margins refer to the difference between the cost of making a product/providing a service and the revenue generated from that product/service. For example, if it cost me $5 to make a chair and I sell the chair for $10 then my profit is $5. A profit margin is usually expressed as a percentage (profit as a percentage of the selling price). In this example, my profit margin would be 50% ($5 is 50% of $10).
High Volume vs. High Value
When you start your business you can decide if you want to be a “Walmart” or a “Rolex.” Walmart has to sell a lot of goods to make their money (High Volume). Rolex only has to sell only a few watches (High Value). Neither option is right or wrong. In the past, I have always been the “Walmart.” This time, I would like to be the Rolex… just to try something new.
When I sell my future product or service, I would like to be able to have fewer clients and still reach my financial goals. This is only possible through larger profit margins.
Look, people aren’t stupid. You aren’t stupid and your consumers aren’t stupid. You don’t have to be passionate about your what you are selling. Your local pool cleaning company is not passionate about the chlorine levels in your pool – yet, they are successful. Why?
You do not have to have a passion about your product or service but you do have to find something your are passionate about within your company structure.
Specifically, you need be passionate in two areas of your business:
1. The Results.
2. The Process.
Passion for the Results
By completing the “why” exercise, you should be excited and passionate about the future results of your business. The results from your business are going to allow you to achieve your specific goal!
Passion for the Process
The process of building a business is difficult at times. I am sure I will have moments where I don’t want to do the work necessary for success. In these moments the results often do not provide enough motivation to push forward. Therefore, having a passion for the process is key. If you are passionate about making chocolate and get to make chocolate – then you are good to go! If you are good at making chocolate but not passionate about it, then you better be passionate about something else in the business. Your passion for the process will be what drives you.
A friend of mine has a side business that sells fabric coffee sleeves. (He definitely followed the rules when creating his business name). I doubt he is truly passionate about fabric coffee sleeves. He is, however, passionate about optimizing and automating systems that emphasize efficiency, which he is able to do through his business. Creating systems is his passion for the process. This is what drives him.
For me, I am also passionate about systems and efficiencies. I love solving problems. I love figuring out how to get the product or service to the consumer the most efficient way possible. I am passionate about the process of automating sales and generating repeat customers. The process of creating and running my future business will allow me to explore these passions. This is a winning combination. I have my passion for the results by answering the question of “why” and I have a passion for the process!
Find out what part of the process you are passion it about. Is it managing your team? Is it the product/service itself? If your clients are children and you are passionate about helping kids, for example, then this could be the passion in your process.
Here are the lists of characteristics I want my future business to have:
- Ability for Self Removal
- Ease of Scalability
- Location Independence
- High Profit Margins
- Passion for the Process
Creating this list of characteristics is my first step on how to make a successful business. Now that I have my list of business characteristics, I will have to start brainstorming business ideas. This is the fun part!
I am going to start brainstorming right now! Tomorrow I will show you how I came up with my list of possible ideas and the next step on how to make a successful business!