Business Management: How to Manage a Business for Long-Term Success

How do you keep your company alive and build something that will last? It can take more than just a great idea and hard work to successfully run a business. If your company is to survive and thrive, it should be highly adaptable to market changes and provide competitive and superior service. 

Businesses fail for several reasons, including poor leadership, cash-flow problems, and the inability to shift with the times. Knowing how to run a successful business for the long term can be crucial.

This article will address the factors impacting long-term business success and provide expert tips for how to manage a business to help ensure survival and longevity. 

Understanding the Business Landscape

Looking at the survival rate of companies that started in March 2013 up until 2023, the U.S. Bureau of Labor Statistics shows that approximately 20% of new businesses failed after the first year and only approximately 35% survived for 10 years or longer.

Here are the key survival statistics for U.S. businesses started in 2013:

Based on the Bureau of Labor Statistics numbers, these survival percentages have remained consistent over the years. So, no matter what changes are happening in the economy, an approximate 50% survival rate after five years or an approximate 35% survival rate after ten years in business can be expected.

A solid understanding of your business landscape can be a good start for navigating the continuously changing market complexities and ensuring long-term business success. To make smart decisions that contribute to the survival and prosperity of your company, consider taking into account these factors:

1. The Importance of Data-Driven Decisions

Random business decisions can lead to failure. Data-driven decision-making is using data to guide and validate your action plan before committing to it. This can take various forms, such as conducting surveys to determine products or services that might appeal to your target market, or introducing a new service or product to a small subset of the population to see how people react to it and gauge its potential success. 

2. The Significance of Key Performance Indicators (KPIs)

Key performance indicators can be essential for the long-term health of your business. One of the many benefits of KPIs is that they provide indicators to help you identify when to take action. They show you when things are going well or when it’s time to act. Examples of some essential KPIs include:

• Customer acquisition cost: This is the money you need to acquire a customer. It includes the cost related to sales and marketing activities and the overhead of bringing in fresh leads and converting them into customers.
• Net profit margin: This is the percentage of revenue that remains after deducting your operating expenses.
• Accounts receivable days: This tracks the average time it takes for a customer to pay an invoice. It helps you measure your cash flow.

3. The Value of Your Customer Base

Your customer base is the group of people who regularly purchase your company's products or use its services. These most loyal customers are valuable to your company's financial health. Identifying who they are and why they use your products or services can help you revise your marketing strategies to attract your target demographic and acquire more customers. Growing your customer base can be critical to sustainable growth. 

Importance of Business Analysis

Management success can hinge on a thorough business analysis, which can help you address the factors affecting or limiting your business growth. This analysis can help you review your current operations and decide what changes might be necessary for the success of the company. 

Examples of key factors to analyze include:

• Your marketing strategies
• Your customer acquisition process
• Your sales process
• Your use of technology
• Your differentiation

A comprehensive business analysis can be critical to maintaining your company's stability and longevity and growing your business profitably. It can also help you outperform your competitors by enabling you to define your customers’ needs and create the right products and services.

Take the crucial factor of customer acquisition, for example. The core of customer acquisition success is a clear understanding of your target customer, which you can use to make sound decisions about product development, pricing, and marketing strategies. Some questions to ask yourself as you analyze your customer acquisition process include:

• Who do we sell to? 
• How can we meet and exceed their needs and expectations? 
• What drives their purchasing decisions? 
• What communication channel do they prefer?

Building a Strong Foundation

Trust is at the heart of every long-lasting business. When planning how to run a successful business for the long term, gaining your customers' trust may be one of the most valuable qualities your company can develop. PwC's 2024 Trust Survey shows that 93% of executives agree that trust accelerates the bottom line. (The survey included 548 business executives, 2,500 consumers and over 2,000 employees in the United States across various industries.)

Here are some actions you can take to help build trust for long-term success: 

• Keep a close eye on metrics that are in line with building trust between your company and your customers and employees. 
• Recognize and address any gap in trust. The PWC survey reveals that while 90% of business executives think customers trust their companies, only 30% of consumers actually do.
• Prioritize providing excellent customer service. 
• Create a culture of trust with your employees.
• Be diligent about maintaining your company's reputation.

To thrive in the long term, you may need to revamp your business strategy to sustain growth. Some ways to do this: 

• Investing in enhanced technology and infrastructure
• Exploring untapped markets 
• Adding new locations, if feasible
• Looking for franchise opportunities
• Developing a broader product line 

Developing a Business Plan

Other recommendations on how to manage a business for the long term include the importance of proper planning. Planning can be vital to management success in the long run. Business owners often talk about business plans in relation to startups. But business plans should be a living, ongoing process that evolves with the company. 

This means that in an era of environmental and political challenges and rapidly evolving customer expectations and demands, how to manage a business for the long term calls for a regular review and adaptation of the strategies shaping your company in the coming years. You can no longer rely on just maintaining the status quo.

Think of your business plan as a business survival plan. If sales are down, your plan should consider detailing how you intend to improve your financial performance, e.g., by cutting costs and boosting sales. Address actions for the short term (1 to 6 months), medium term (6 months to 18 months) and long term (18 months and beyond).

Today's business plans should also consider addressing an exit strategy if you must leave your company for health reasons or to pursue other avenues. This includes planning the timing and type of exit. For example, you could sell the business or pass it on to a family member. You might decide to close the company or go for a phased exit. A phased exit is the chosen route if you want to leave the business but not exit it completely. It's a way of gradually handing over a company to a new owner who is still being trained and whose stake in the company grows as he takes on increasing managerial responsibility. Planning may allow you to maximize your return when the time comes. 

The Path to Business Prosperity

In addition to laying a solid foundation for your company, here are five keys for how you can run a successful business over the long haul in today's business environment:

1. Be flexible with where and how employees work. 

Top talent can be more important than ever to help ensure your company's survival. In today's environment, employees expect more flexibility. If you want to attract the best talent, giving people a choice of remote work or work schedules that offer flexibility can be an effective strategy to lessen the likelihood of losing the top talent you need. 

2. Broaden your vendor and supplier base.

In this time of economic uncertainty, it's important to diversify your vendor or supplier list. Diversification can help provide stability in the face of uncertainty. By spreading out your supply sources, you can help reduce your dependence on any one particular source. This can help mitigate the risks of disruption in the supply chain, which can harm your company's survival. Consider, as well, shifting from a global supply to a domestic supply source to help handle supply chain instability.

3. Reinvent your business.

A company should consider reinventing itself from time to time if it wants to stay in business. Forty-five percent of the CEOs surveyed in the 2023 PwC Global CEO Survey believe their company will not be viable in ten years if it stays on its current path. (The survey was based on responses from 4,702 CEOs across 105 countries.) 

One of the major challenges in today's business landscape is not launching a new company but ensuring its longevity amidst constant market fluctuations and ever-growing competition. 

Examples of reinvention strategies to consider include adopting new technologies related to your business and forming strategic partnerships that can enhance your business.

4. Have an aggressive strategy to cut costs.

During times of economic uncertainty, cost control can be critical. Look at your budget line by line, prioritize essential expenses, and allocate less of the budget towards items that are not essential for survival. For example, a small restaurant might choose to spend less on marketing. 

5. Prioritize speed.

Speed is paramount in today's rapidly changing business environment. This means remaining vigilant and responding quickly to changing trends that can affect your business. 

Take inspiration from what happened when the pandemic first erupted. Many companies had to accelerate their decision-making and other processes, empower front-line staff, and adopt new technology overnight. 

Some ways you can adopt a speed culture now to be prepared for long-term success include:

• Delegating decision-making 
• Flattening your company hierarchy with fewer middle managers to allow people to execute rapidly without the burden of bureaucracy
• Addressing poor leadership skills by developing tomorrow's leaders who are agile, have the necessary resilience to persevere, and are capable of tackling obstacles and taking on new challenges

Refine the Business Process

A company's processes are the backbone of all operations, from onboarding to shipping.  As your company expands and evolves, you can help ensure long-term business success by continuing to refine your business processes to create good corporate habits.

Processes encompass various elements, such as:

• Systems for recruiting and talent development
• Performance management procedures 
• Feedback systems 
• Decision-making structures
• Sales processes
• Customer service guidelines
• Business development processes

These and other processes are an integral part of management success and can provide the necessary structure and consistency for your business to run smoothly in the long run.

Set up metrics to track how well your processes are working and refine them as needed to help ensure ongoing success. 

Making large-scale changes to your business processes takes time and can be overwhelming. Consider making incremental changes as you go along. Take inspiration from the Japanese idea of kaizen, which entails making small, manageable changes over time to achieve large-scale benefits.

Staying Ahead in the Competitive Landscape

Having a competitive edge starts with an awareness of the factors that can impact your business's success. Examples of common pitfalls include:

• Not conducting regular analyses of your competition
• Having a low awareness of the market demand for your product or service
• Not adjusting your pricing strategy to the market
• Poor leadership at the top
• Not having the right team to help you scale your business

To avoid these pitfalls and remain competitive, consider these tips:

1. Know your competitors.

What makes people buy from them?

2. Understand your unique selling point.

What sets you apart from the competition? Is it exceptional customer service, outstanding quality, or special and unique features of your product? By emphasizing these advantages, you can help persuade customers to opt for your products or services over those of your competitors.

3. Know where you can improve.

What can you improve to stay ahead of your competitors? Innovation ideas can come from your own research and ideas from staff, customers, and suppliers. They can also come from analyzing customer complaints or learning from mistakes. Your competitors are likely continually improving what they offer. You need to do the same if you are going to stay one step ahead of the competition. 

4. Adopt the right pricing strategy.

What about your pricing strategy? You can compete on price by adopting the lowest price point in the market for your product or service. This doesn't inherently imply a reduction in quality. Instead, it would involve streamlining your processes, making your operations as efficient as possible, and keeping costs low to offer your goods and services at the most economical price.

5. Be prompt. 

Speed can also give you a competitive advantage. People value speed, so prompt service or product delivery can make your company stand out.

6. Maintain your relevance.

It can be crucial to evaluate the demand for your product or service regularly. You may need to adapt to changes in the market and evolve your company.

7. Invest in leadership. 

Prepare your leaders and teams to thrive in a competitive world by investing in leadership training and development and building exceptional teams that will help your company stand out.

8. Consider the future.

Companies that prepare for growth may be more likely to survive than those that remain stagnant. Keep abreast of the most recent advancements in your industry, closely monitor consumer trends, and consider investing in cutting-edge technology that can accommodate the growth of your business.

The Takeaway

One of the major challenges in today's business landscape is not launching a new company but ensuring its longevity amidst constant market fluctuations and ever-growing competition. To help ensure long-term success, consider these tips:

• Make data-driven decisions to ensure that you are guided by cold and hard evidence.
• Measure the right KPIs to monitor your company's health and make adjustments.
• Know your customer base and its crucial significance to your long-term success.
• Conduct a thorough business analysis regularly to help you identify potential roadblocks in your current operations and plan for ways to overcome them ahead of time. 
• Build a strong foundation based on trust.
• Periodically refine and revamp your business processes to help you adapt to market changes and disruptions.
• Create a dynamic and evolving business plan.
• Leverage the capabilities of new technologies.
• Consider the moves to running a successful business for the long haul: being flexible with employee work arrangements, diversifying your vendor and supplier base, reinventing your business to avoid stagnation, adopting an aggressive cost-cutting strategy, and prioritizing speed.
• Focus on gaining and maintaining a competitive advantage to help you plan strategically.

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