Running a Successful Business

Posted on November, 2022

Successful Business – Introduction

You’re thinking of building a successful business as a start-up. You want it to do well, yet 20% of businesses fail within the first year and 60% of businesses fail within the first three years.

It is, no doubt, not the easy route in life to set up a successful business. However, it can be extremely rewarding if your business idea comes to life and brings value to society.

Small businesses create jobs, are a hotbed for innovation, and are the lifeblood of the economy.

Why go into Business in the First Place?

Why not just get a 9 to 5 job and make your life simple?

In my experience, business owners are a special type of individual. They generally dislike following others, enjoy the process of bringing an idea to life, and are focused on the future (but can be impatient).

Business owners also tend to prefer to delegate tasks, rather than engage in a lot of detailed work. In other words, they like to have a holistic and “top-down” view of any enterprise.

Starting your Successful Business

You might look at many of the largest corporations and think, how much money did it take them to get started?

Most businesses, however, start from the dining room table, or out of a garage. They tend to not be capital intensive (in terms of funding at least) and rely on the skills of the founder in the early stages. For instance, our own tuition company was set up by Rupa Harji, and she initially delivered most of the teaching material. When the business started to expand, it became necessary to bring in more help and move into centres.

At the early stages, you should find that whilst your business is not necessarily capital intensive, it is a lot of work to get it off the ground. It would help if you were looking to make connections that will be advantageous down the road, and build your customer base.

 

Over time, you’ll begin to understand the needs of your business, and the basic operations and administrative work that needs to take place. Running a business in as efficient a way as possible at first is generally critical as you’ll want to build funds to invest back into your business.

In our own tuition business, we have invested a great deal into our design, materials, resources, website, processes and systems to ensure that our model is workable and scaleable.

Franchise

A Successful Business Avoids Tax

If you decide to go into business, you should eventually consider setting up a limited company, or other company structure.

Always seek financial advice when it comes to these details as there can be company structures that are more tax advantageous depending on the type of business. For instance, a limited company can be an advantageous tax structure for a rental property business, but would usually be not an advantageous structure if you were planning to make a lot of disposals (sell properties) because of CGT (Capital Gains Tax). Usually, however, a limited company is an effective way to reduce your tax liability and legal risk.

Although business owners have to work very hard for very little payoff at the beginning, you should think of it as forced savings that increase the value of your asset. The business is your asset and requires investment to return future value.

Why is this so powerful?

If you are an employee, a lot of your income goes to taxes. The business owner, however, can avoid many of these taxes as long as the profits of the business remain within the business. At some point, the business owner will naturally wish to extract profits from the business, however, this should not come at the cost of investment back into the business.

Investment back into a business will always be more tax-efficient (as long as the investment delivers enough return).

Morality and Running a Successful Business

Upon reading the last section, you may think that business owners are morally-deficient in avoiding these taxes. However, you should consider the amount of value that the business owner can deliver to the economy. There are also many taxes that businesses need to pay and costly penalties for non-compliance.

Business rates, capital gains, business rates, stamp duty (for property businesses), VAT, etc. All of these taxes can be extremely costly and are sometimes impossible to avoid. In the case of most small businesses, there are so many extra charges that need to be considered, and unlike many multi-national corporations, little way to avoid them.

Most business owners want to deliver value to their customer base. Although there may be visions of vast wealth in the future, it isn’t the reality that most business owners live with day-to-day.

When running your business, you will inevitably run into ethical issues. You will need to aim to be firm, but fair in your dealings with people. A soft soul will be hardened by business, and a ruthless character will learn about the value of people skills. No matter what the issue is, it is important to put the business and the values of the business before what you want. For instance, we have had an occasional client who has lost his/her job.

In these situations, you need to decide to either be perhaps foolishly compassionate or a hard business person. If you offer a student a place in a class for nothing, you are automatically cutting into your margins. You also do not want to set a precedent with your clientele and let them know that you have certain vulnerabilities.

At times like these, learning how to say “no”, is the most important skill to master. Don’t confuse your main business with a charity. When you can devote your excess resources to charitable endeavours, that is the time for you to be passionately giving.

Dealing with the Stress of Running a Successful Business

There will be, no doubt, stressful moments in your business career.

How can you manage your stress on a day-to-day basis?

First, make sure to keep active. Keeping fit and active will keep your energy levels high, help your body maintain a healthy immune system, and will help you maintain a competitive mindset.

Second, make sure that you get enough sleep. When we were talking to Elena Chimonas of Camden Image Gallery about the struggles of running a business, it was clear that sleep was a significant priority for her, and the most critical factor in her health and well-being.

If you maintain a regular sleeping pattern and have a decent bedtime routine that helps you wind down and settle in for the night, it can make a big difference to your mental and physical well-being. I found that I sleep better with a sleeping mask and Bose Sleepbuds. I also need the room temperature to be low as I tend to get very hot when sleeping. You can use devices to monitor your sleep to ensure that everything is optimised.

Third, have contingencies in place. Many seemingly improbable events are predictable. Have you put in measures to ensure that your business can still run with minimal disruption?

Bring in the right people

Getting the “right people” in to help you expand, run and manage your business is crucial to creating a successful business. Although businesses vary widely in terms of what they need, I think there are generally certain traits that are required for a great employee:

  1. Reliability – To turn up on time and complete the task required
  2. Honesty & Integrity – To be capable of handling tasks that require a person to be trustworthy, such as handling payments, cash, and handling sensitive information
  3. Compliance – To follow procedures put in place by the business
  4. Willingness to learn and improve – Exactly what it says on the tin
  5. Clarity of communication – To share information directly and in a way that is easily understood
  6. Conflict resolution – To engage with people, be a calming influence, and think of effective solutions when problems arise
  7. Responsiveness –  To respond to inquiries with relative promptness
  8. Teamwork – To work well with others
  9. Technical competence for the role – To be capable of performing the tasks that are set out in the role
  10. Confidence – To have faith and belief in themselves and others

I think that finding the correct person for a role can be extremely challenging, and it is certainly something that we devote a great deal of time towards as a tuition centre.

Working on the business and not in it

Perhaps the reason why so many businesses fail after a span of years (aside from poor management), is that both the business climate changes, regulations are brought in, or there is a change in the market environment.

Your role as a company director is to understand this business from the “top down”. Of course, you will need to understand the basic workings of the business at a fundamental level, but you should be like the conquerer surveying your vast lands. What viable markets can you enter? What can you do better to grow your empire? How can you cut down on wastage and control expenses?

Also, as a business owner, you may want to earn your income more passively and devote time to other projects, in which case, your business needs to operate by clockwork. Most business owners never end up able to step away from the day-to-day running of their businesses and have to devote most of their energy to keep their enterprise going. What type of business do you perceive yourself owning?

Conclusion

Running a successful business can be both extremely rewarding and challenging.

To succeed, you must think big but simplify at every turn. Hard work is necessary for success, but equally, it is crucial to work efficiently and in a lean manner, and allocate both human capital and cash efficiently.

If you gather the right people around you, focus on your customers, and work to make your business better, then you can achieve success in the business space.

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