In the United States, 45% of businesses don’t make it past five years. 65% don’t make it past ten years. Yet everyone who ever starts a business backs themselves to beat the odds. Optimism can be blind and naivety can be bliss, but is it possible to predict if a business will become a roaring success or a damp squib of a failure?
The trajectory is only partly defined by the idea, the rest is in the execution of the idea. The quality of the execution is shaped by the doers. The leader and the designers and the marketers. The rest is up to market forces and ability to adapt. Here’s how to know if your business will succeed.
People buy from you
Start a business because there’s a need for what you sell. Consider yourself a success only when you have paying customers. Being propped up by grants or investment but securing no customers is a giant band-aid just waiting to be ripped off. When pressed for an answer, do people say yes?
Projections and forecasts aren’t real, neither are polite nods of encouragement or speculative expressions of interest. Only fully settled revenue is a real indication of demand and therefore survival.
They tell their friends
If customers are buying, are they coming back for more? Are they bringing their friends and telling the world? The value of word-of-mouth is that every new customer is worth five. It sends your marketing cost-per-acquisition way down and leads to that beautiful hockey stick line of growth.
It’s easy to sell something to someone once. Repeat custom and referral are the real tests of quality and longevity. Products that are meh and experiences that don’t delight won’t be talked about. The space will be filled with small talk and whatever’s in the news. Iterate and improve until you’re remarkable.
What does the future hold? No one knows exactly, but you can take an educated guess. Exploring trends in technology, human behaviour, politics and population can uncover future scenarios for the way we’ll live. How does your business stack up in each one?
When self-driving cars are mainstream, who will be in the running? When we’ve had enough of global warming, which companies will be left in the past? When we’re all living until we’re 150, who will represent the future?
But even short-term developments can render a promising business worthless. Relying on another platform’s API or a legislation loophole is like building a house on a foundation of sand. Forging a company prepared for the long term can guarantee outlasting the competition and being an ultimate success.
When you’re at capacity, what gives? Costs continue to rise, the same number of hours are in each day, but you’re running about like a headless chicken charging exactly the same. Something has to break, and it’ll probably be you.
Businesses that succeed remove bottlenecks. They draft in help; they strengthen processes and they automate what they can. They innovate to drive down costs and they build a solid reputation to put upward pressure on prices. Bigger margins equal security and room to invest in further scale.
You learn from your mistakes
Trophy cabinets filled with silverware represent achievement. A healthy bank balance and a happy team signal success. But imagine if, for every challenge we overcame, we received a similar token. A certificate to everyone who survived a recession, a medal to those who overcame an incident or grew past an obstacle.
We’d likely remember them much easier, recall what was learned, and never make the same mistake again. Learning from mistakes is just as much a success indicator as lengthy runs of victory. It builds resilience and knowledge and a solid foundation. Which lessons are etched in your memory and are you only making new mistakes?
You have imitators
Good news travels fast. If you’re onto something good, people will copy you. No one wants to imitate failure, so it can only be a good sign. Let them try. Others being in your market will help to validate it. Having longevity in the field will serve you well.
Let the newbies think it’s easy and don’t let them distract you off course. Obsessing over what they’re doing will direct your energy to the wrong place. Fascination with another company only makes them seem more prevalent. It keeps you both playing small, leads you down the wrong path and ignores the bigger picture. Imitators are good, imitation is not.
You’re fully committed
The biggest indication of a business succeeding is the people within it being committed to doing so. Being prepared for a bumpy ride and ready to enjoy it. Relishing the opportunity to implement new ideas and see them through to completion. If you’re putting everything you have into something making it, how can it not? If you’re going to make something a success no matter what it takes, it surely will.
You can sense conviction in someone’s demeanour. You can detect commitment from their stories. Wandering eyes and conflicting priorities don’t equal longevity and profit, but fully committing leads to the stars aligning and everything, somehow, falling into place.
Whilst there are no dead certs, these seven indicators will get you pretty close to knowing. Whether or not your business succeeds is in your complete control.