What makes a successful company in a market? Is probably the single biggest question a new start-up team must be able to answer. What factors make a successful business has always been a difficult question to answer.
The answer has always depended upon who is asking the question!
Dreamers look for unicorns with unique protectable offerings, such as Intellectual Protectable rights, a Unique Selling Proposition (USP).
Traditional funders, such as banks want high returns with low risks, and owners who will take all the risk directly, or being prepared to 100% underwrite the banks so called investment. This logical shift has its own problems. Risk reduction by definition reduces opportunity; in essence if you remove all the risk you also remove all the opportunity.
Entrepreneurs Solve Problems
Entrepreneurs genuinely look at solving an emerging problem, the old adage is:-
“The secret of success is to find a need and fill it, to find a hurt and heal it, to find somebody with a problem and offer to help solve it.” – Robert H. Schuller
While the logical approach of bankers is to ride an existing market wave, true entrepreneurs look to create the wave. They are looking at a problem and identifying the ideal innovative solution for that problem’s resolution.
Researching Successful Businesses
So what makes a successful business model includes a whole variety of factors including the core idea, the experienced team, the market opportunity, market access, competition, scalability (the list goes on and on, depending upon who you are talking with) and what resonates with key stakeholders and target audiences.
Recently Bill Gross, CEO of Idealab decided to research this using his extensive range of business start-ups; 100 of his own, and matched by another 100, across a whole range of sectors. His assessment started by analysing what makes successful businesses. He came across 5 key common factors and he cross-referenced those compared to businesses which have succeeded.
Bill Cross’s 5 key areas a successful business has to have include:-
- The Idea: defined and coherent.
- The Team: skills, experience, energy and how well connected.
- The Business Model: comprehensive worked through covering the business need.
- The Funding – access to the right amount of money to achieve its core goals.
- The Timing – identifying the market timing to meet target audience needs.
The research results contradicted what many thought would be the results across the 200 companies he and his team analysed, which include global names such as Airbnb, Youtube and LinkedIn. His analysis showed that of all the factors which can affect success or otherwise of a business, success really came down to a few key factors which are common across all markets, sectors and over time.
Success in Business Relies Upon…
Timing is THE common factor in a successful business at 42%. It is the most common trait of successful company start-ups.
Team came in 2nd, with 32% and the Idea only came 3rd in importance with 28%. The business model, upon which so many advisors focus their attention was 4th at 24% and the funding came in 5th at 14%.
Timing Is Everything
The quality fo the idea is not as important as timing. Timing, the driving strategic factor can be identified initially through a thorough PESTEL analysis. Timing is the bottomline performance criteria in driving the success factor for a business. PESTEL factors set the macro landscape a business operates and defines the timing of its launch. If the landscape is favourable then a business can succeed. I not, then even if everything else looks great then your chances are far lower, than if you get your timing right.
This shift from build and they will come, the old motto of every good idea, qualifies that statement by saying if the time is right then if you build it they will come.
The Importance of Research for Leadership Teams
Leadership teams need to focus on answering the question their target customers ask, now. Timing is offering the solution the their customers will pay for today, not waiting for it or putting up with second best. If you can answer their needs when they need it, with what they need, then you are on the first rung to find success. Without good timing you are creating products and services no-one (or not enough people want). Timing is equally important for leadership teams to assess if your product / service can be accessed by the target audience.
Successful companies work with their markets to get their timing right in launching products and services that fit within a market. They can challenge existing customers perceptions but they must be the right product at the right time for the right customer if a business is to succeed.
See Bill Gross, CEO of Idealab Ted talk here:-