What are the pillars of a successful business?

A success of a business will depend on the management and association of skills, methodologies, policies, techniques and practices that are defined, with the objective of managing internal behaviors and enhancing human capital within companies. Having the basics like a pro commerce and distribution license will be a great help for its development and maintenance is therefore something very important. What are the 3 pillars of a successful business?

Think of your business as being situated on a three legged pedestal. If one of the legs broken, your business is prone to stumble! These 3 pillars are crucial to your business, and you can’t operate even when one of those are faulty or not performing as needed.

Business management and essential pillars

Typical measures of business success include the growth of your company, here are the 3 pillars of a successful business:

1. Finance

You have to master your finance, think of your mission or any major goal you want to accomplish as a straight line. Point A is where you are right now and Point B is where you want to go.

How much money do you have? How much money do you need? and how are you going to manage it? This is including to set the right price and are profitable on every sale and job. And how can you bring your business to the next level? Do you need investors?

This department should ensure that you have enough cash to hire and expand, as well as you have a written plan for growth. This is the part of your business that handles your books and records. Also dealing with accounting is the department that helps you with taxes and other legal compliance issues with the IRS and related governmental agencies.

Have clear and easy to measure goals

No development can see the light of day without clear and above all achievable and measurable objectives. You can waste your time and demotivate your teams by setting overly optimistic goals. This will affect your productivity and that of your teams without allowing you to really move forward.

Very careful cash management (cash flow management)

The management of the working capital and cash flow of the company covers the most frequent risk of the disappearance of the company. This goes through :

• an action on stocks, making it possible to limit fixed costs;
• action on suppliers, to obtain optimum payment terms and more generally more attractive offers (price, delivery times, quality, etc.);
• an action on customers, to collect the proceeds of sales as quickly as possible.

These actions make it possible in particular to limit bank charges (overdraft charges, wire transfer fees, etc.).

Read also: Financial Forecast: Estimate the viability of your business and Financial Analysis | Measuring performance and profitability

Good relations with its partners

A company cannot live in autarky. It has suppliers, customers, regulators, partners…

Of course, dependence on one (or a limited number) of customers and/or suppliers is to be avoided. And the financial situation of customers and suppliers should be monitored regularly.

But the establishment of real partnerships with customers (especially in BtoB) and especially suppliers, but also other entities (which can be very varied: public bodies, schools, etc.) is often the key to detecting trends, benefit from progress, etc.

And of course, the relationship of trust with its chartered accountant and/or its auditor makes it possible to ensure optimization of the resources devoted to accounting, financial and tax management and to deal with crisis situations more quickly and more effectively.

Adapted financial management

To be able to develop or simply resist, a company must constantly invest in different areas such as research, (quality) equipment, employees (recruitment, training, etc.).

To make these investments successful, the corresponding resources must be available. To be sure, the prerequisite is to have a realistic and relevant forecast vision of your situation. This requires in particular knowledge of its expenses, its sales, its profitability, etc.

To make appropriate decisions, the company develops dashboards, simple or complex depending on its size, organization and means. Analytical accounting and management control are the tools that make it possible to measure and analyze the activity of the company as well as its financing capacities. If it does not have in-house skills, the company relies on its chartered accountant to have these dashboards, these key indicators, etc. which must be analyzed very regularly (frequency to be adapted to the size and type of company and up to a daily examination for large companies). In particular, avoid postponing decisions that must be made quickly, especially in the event of a crisis (emergency plan, request for assistance, etc.).

Finally, the strategic plan (3 or 5 years) underpins and ensures the consistency of these investments.

Cost Optimization: Boosting Profits while Cutting Expenses

2. Sales and Marketing

The Marketing and Sales function brings together all the activities and processes enabling a company to: understand consumer expectations and the situation of the market in which it operates; to try to influence consumer behavior in the direction of its objectives.

Marketing places the customer at the center of business strategy. It consists of defining and analyzing consumer needs using specific tools and methods. And as a result, it helps to determine the actions to be implemented to influence their behavior. The objective of marketing is to build up a clientele and then to retain them, taking into account their satisfaction as a priority.

The Marketing and Sales function: what definition for what issues?

The definition

The Marketing and Sales function brings together all the activities and processes allowing a company to:

understand consumer expectations and the market situation in which it operates;
to try to influence the behavior of consumers in the direction of its objectives.
What issues?

The importance of the Marketing and Sales function can be understood at several levels:

• From a financial point of view, market studies make it possible to best choose the products that will be the most profitable for the company.
• On the commercial level, a good study of consumer expectations will make it easier to sell products.
• On a strategic level, the Marketing and Sales function makes it possible to avoid confrontation with competitors by selecting the customers and products most suited to the characteristics of the company.

What tasks within the Marketing and Sales function, that contribute to pillars of a successful business?

The Marketing and Sales function is divided into two main types of tasks, which are upstream and downstream of product design.

Upstream of product design: strategic marketing

Before designing a product, the company must ask itself what consumers want.

• to understand consumer expectations and the situation of the market in which it operates
• to try to influence the behavior of consumers in the direction of its objectives.
• Its initial objective is to better understand the market in which it intends to sell its product.

The company is looking for two types of information:

• what consumers expect: what are their needs? what do they like in the products? how do they eat?
• what the competitors are doing: who are the competitors? what products do they sell? At what price ? to which customers?

Once this information has been collected, the company will decide what its positioning will be.
The company will therefore define what will be the specific characteristics of the product in order to make it unique in the minds of future consumers.

Downstream of product design: operational marketing and sales

Once the prototype of the product (or service) has been designed, we enter the operational marketing phase.

There are four major variables on which to act.

The 4 Ps (Product – Price – Place – Promotion)

1. The Product variable (product): it is a question of seeing which characteristics of the product are the most important for the customer: size, quality, lifespan, etc.
2. The price variable (price): it is a question of determining the price which will make it possible to sell large quantities of the product without degrading its image in terms of quality.
3. The Distribution variable (place): this involves determining the distribution channels (i.e. the types of stores) in which the products must be sold. If the stores are not suitable (selling sneakers in a hair salon), sales will be lower.
4. The Communication variable (promotion): this involves making the product known to as many people as possible by using the most appropriate advertising media (television, internet, radio, mail).

The Marketing function: debates and perspectives

Marketing and ethics

The ability of the marketing function to understand and influence consumer behavior is not without its problems.

Since the 1970s, consumer associations have highlighted the dependence of certain customers on brands and the dangers of the omnipresence of advertisements.

Indeed, some people do not hesitate to go into massive debt to buy products that they do not need, but that advertisements make artificially indispensable.

Looking for loyal customer

Even if the Marketing function, as an independent function, is relatively recent, it has nevertheless undergone some changes.

Until the 1980s, sales and distribution were essentially done in a single transaction logic. But companies have realized the need to keep customers loyal to their brand and their products.

Indeed, it is much less expensive for a company to keep a loyal customer than to get a new customer. The emphasis is now on the relationship with the customer, to ensure that he is satisfied and that he is ready to buy back the company’s products. We then speak of relationship marketing.

3. Operations

This is one of the 3 pillars of success necessary to run the optimal business. You’re good with your finance, sales and marketing. Now you must ensure that your operations should run as smooth as possible to avoid complaints.

These operations include hiring the right people, purchasing the right equipment, making sure your software works as needed, delivery, stocks, etc.

If your operations are not in a good condition, and you don’t deliver on your promises in a timely, qualitative, and satisfactory manner… your customer won’t work with you again or buy your products or services. Worse come to worse, they will refuse to pay you for the work they feel wasn’t delivered as promised.

Photo credit: DEZALB via Pixabay

Financial and Accounting Management Consultant: Navigating Finances