Key Success Factors in Business Definition
In the rush of modern business, there is a growing tendency towards over-complication. We need to keep things simple and keep focused on the Key Success Factors for growing business. There is something magic about simplicity. Over hundreds of years, the same principles for success have applied and still do today. After 30 years in business, and owning 40 of my own businesses and 2 bankruptcies, I came to this conclusion: The key to success in business lies in mastering your skills and mental attitude in these basic 6 Top Key Success Factors in your business.
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Key Success Factors.
Here's a guarantee. You will succeed or fail depending on how you approach your unique key success factors in growing your business. Understanding them, and paying a 100% attention to your business critical key success factors.
The key to success in business will always depend on your skills and psychology in these keycritical success factors.
Your business key success factors (KSF) also known as Critical Success Factors (CSF) refers to the most important elements or factors that contributes to the highest result, impact or outcome, in achieving a business goal and objectives.
The key to success in business is about focusing on producing greater results and performance from the same activities, the same capital, and the same people. It's about identifying, improving and taking full advantage of all the overlooked, hidden and underperforming opportunities that exist within your own business now. About getting substantially more for less, optimizing and multiplying the results in your business key success factorswith minimum effort, expenses and risk.
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"Great success and mastery in any field always go to those who are "brilliant on the basics"
- Brian Tracy -
The real success in these business key success factors for growing your business is your ability to manage the performance of each of these simple but very important drivers in your business by focusing on improving these areas by a small percentage each week, month, and year. Small differences in any of these key areas can make a huge difference in success, growth, profit, and income. Sometimes by focusing on one particular success factor can Double or Even Triple business almost overnight
There are many key success factors and for every business it's different. But they can all be clustered under 6 basic groups.
"Becoming a master is not about doing 4000 different things, it's about doing 12 things, 4000 times each."
- Chet Holmes -
What Is The Top 6 Basic Key Success Factors?
The Top 6 Key Success Drivers for in any business are:
- Money
- Management
- Marketing and Sales
- People
- Product and Service
- Process and Systems
Key Success Factor 1: Management (Owner)
Your business can only grow to the extent that you grow. It's not what your business can do for you, but what you can do for your business. The more valuable you become to your business, the more valuable the business will become to you. Your key to success in business will depend on developing the right mindset, skills, vision, and mission to focus on.
Key Success Factor 3: Marketing and Sales
Marketing and Sales is about creating an edge in the market by consistently, testing and measuring your results. Not every strategy you try will work for you. You have to understand the
Key Success Factor 4: People
This includes your key team members and partners. Building the winning team means getting people to work well together. The right people doing the right things at the right time in the right way for the right reasons. It's about Relationships, Trust, Attitude, Contribution, Accountability and Execution.
Key Success Factor 5: Product and Service
It's all about the customer, what they want - quality, price, packaging, display, design, distribution, production and service. Help them to get what they want, and they will help you to get what you want.
Key Success Factor 6: Process and Systems
Systems and Procedures for every part of the business. - This is key for growing, scaling and expanding your business. To develop a simple repeatable and proven formula, to do just that
What Is The Most Important Key Success Factor?
Of all the 30.2 million small businesses in the U.S.—which account for 99.9% of all businesses in the country, 98% of them earned less than a million a year in gross income. That's 29,6 million businesses, many of which won't be around in five years. Many of which have trouble keeping the doors open, let alone growing their business by 100%, 300%, 500% or 1000% would be a huge stretch. There's no way!
Growing Your Business 100 X Fold - Is this guy off their rockers?!!!
Every year the accounting firm Deloitte & Touché publishes the Fast 500 – a list of the 500 fastest growing companies over the previous five years.
The overall2019Technology Fast 500 companies achieved revenuegrowth ranging from 166% to 37,458% over the three-year time frame, with amedian growth rate of 439%. That's average growth of 439%, which, you'll agree, is substantially higher than the average growth rate of 11% for small businesses.
On the fast 500, the top 30 companies all hundred folded their annual sales in five years. Most of these companies you may have never heard of. The top three on the list had annual revenue increases of 30-fold to 60-fold – that's 3,000% to 6,000%! In just one year!
My point is that every one of these companies, have been to build on The Top 6 Key Success Drivers in any business, but the most important and foundational factors will be Money and Marketing. (Not taking in account the driving force of the owners' mythology)
Certain success factors have a greater impact depending on where the business is in the business growth cycle. For instance a new start up the critical success factors for growing business will beMoney, Marketing and Product.
As the business is growing and becoming bigger the other factors like developing the Owner, Team and Systemsalso becomes very important. Although every one of them is just as important as the other one, the most important critical success factors for growing business will always be Money, Marketing and Product.
Most business have theProduct thing covered, delivering a good enough product or service to be successful. From countless research results, Marketing and Sales andMoney is the small business biggest challenge. But the One key factor responsible for most success and failure is Money management. You can read the article "How To Eliminate The Biggest Money Mistakes in Small Businesses" for full details.
One Key Success Factor Responsible For Most Business Failure?
After failing many times in business, I agree with numerous business analysts that out of the top 6 key business drivers, poor Money Management is the number one factor responsible for businesses going bankrupt.
In the article
One of the most important business lessons I have learned over 30 years, and that made the biggest contribution to business success was from Steven Walker, (CA) who taught me thatall the information you need to make the right decisions regarding your business can be found in your numbers. It will provide you with financial anticipation and foresight to make the right daily decisions. Want to know where to spend your advertising money, where is the most business coming from, what is your most valuable products and customers? Where is significant potential for growth and profitability? Listen to your numbers, they will guide you. Without these numbers, you will not be able to make accurate daily decisions.
"If you don't know your numbers you don't know your business"
- Marcus Lemonis. The Profit Show -
Which leads me to my next point...Every business is different, and your decisions need to be different too because "there is no one-size-fits-all business solution". Only through proper business & financial analysis can you make good business decisions.
Business & Financial analysis is the process that evaluates the current, and future viability, profitability, and stability of a business to determine the overall health and performance of a business using information taken from its operational activities and historical financial statements. Business & Financial analysis creates an operational or financial number that, if addressed correctly, will positively improve the total financial performance of the business. It simply answers all the question accounting and accountants can't.
Every Key Success Factor Has Its Own Numbers.
Every one of these 6 Top Key Success Factors have their own numbers, or critical success factors for growing business. It is your job to find them and measure them. What you don't measure, you can't manage. This is one of the reasons so many small business fail.
They simply do not know their numbers. If you don't know your numbers, then you don't know your business. By making small changes in any of these key areas can make a huge difference in success, growth, profit, and income.
Your business success will come from your ability to identify, analyze, and manage the performance of these simple but very important Lagging and Leading indicators in your business. To change any current results in your business, you have to focus on the Lead indicators or measures. They are the things you can control and influence that will lead to a different result.
Lagging Indicatorsare an important (key) measurable value of an intended result or goal that you want to achieve. For example, to increase your business growth, sales, profit and income.... Lagging measures, reports past results or events that already happened -the end result. For example, total sales for the month, total Net or Gross profit for the month. These results have passed, and there is nothing you can do to change it. They are history.
Lead indicators or measures in business are the day-to-day activities that leads to the result of the "Lag Indicators"(The goal or objective you are trying to achieve). These Lead activities (Input) drive the performance and success of the "Lag Indicators" andpredicts future business results.
These are the basic numbers that you have to evaluate,track, manage and consistently improve in your business:
Key Success Factor Examples
Here are examples of the basic key success factor examples that have a major effect on any business.
There are 4 factors affecting the profitability and growth of any business, including yours. You don't have to make big improvements in each of these 4 areas to see massive results. (See images below)These drivers are:
- Yourtotal salesevery month.
- Your variable costsyou have in producing the products and services you sell. These are variable costs because they vary as sales increase or decrease.
- Them arkup %or theprice you charge.
- Yourfixedcosts, because they do not change.
Then there are 4 factors affecting the cash flow of any business, These drivers are:
- Current Cash, Bank Account balance.
- Average Receivables and Receivable Collection Days.
- Average Payables and Payables Payment Days.
- The Average Inventory.
Then there are 4 factors affecting the sales of any business, These drivers are:
- Total leadsor potential customers you meet every month.
- How many of these leads youconvert into customers.
- How frequency customers buy from you every month.
- Theaverage amount of money a customer spend every time they buy from you.
Action Steps
Measuring the leading key numbers in the 6 key critical success factors for growing business will allow you to have hindsight, the ability to understand why you have certain results(numbers) in your business. After that, you can start to ask various "What if questions, such as "What if we increase the income by 20%?" Or "What if we reduce cost wit 10%?" These changes probably will have numerous results, many of which might have never been anticipated.
Work your way through the above list, asking how (or whether) each factor impacts your business, and if it does, how you would change that factor to improve your business. Imagine improving that particular factor. How big of a difference will it make? How would it impact your business? Or, imagine that factor getting worse.
In other words, if "factor-x" were improved, would it make a big difference? For each of the key success factors listed, perform a quick analysis and narrow down the list.
By asking a series of "what if" questions will give you the ability to have foresight that will allow you to manage your business a 100 % better, Reduce risk, have confidence in your decisions and make you considerably more profitable and grow your business substantially
Items to include. Next, develop a system for bench marking each factor, to understand where you are, right now. This phase is all about tracking. Tracking is creating measurement systems for each key success factor. Bench marking is establishing a baseline level of performance with which to compare your progress and analyze the impact of any changes you make. So we need to set metrics, draw the benchmarks, and put tracking systems in place.
After selecting your key success factors and creating metrics and systems for tracking them, optimize. Establish a goal for each of the critical success factors – where you want to go next – and then make changes to your process to reach that new goal.
Another way to think about the optimization issue is to use the 80-20 rule. This "rule" tells you that five to nine key success factors are more important than everything else combined in terms of how much money you make. If you apply the 80-20 rule again, you'll discover that one or two of those factors are more important than all the others combined, so you'll want to work on those first.
Key Success Factors in Business Definition
Source: https://thebusinesssniper.com/6-top-key-success-factors-for-any-business/
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