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The one thing every successful business has

A successful business fulfils all your financial needs. Want a higher income? Don’t wait on a raise by a boss, expand your business. Want passive income to take a long vacation? Higher a manager to man things while you’re away. Cringing at your tax bill? A properly set up company is the best tax protection vehicle you can have.

But the reality is that after 5 short years, half of all businesses in the US fail. And when they do, they can have the reverse effect on your financial health. Destroying the capital you put into it, taking years away from your career with nothing to show for it, and sometimes even putting you in a world of debt.

Ultimately all a business must do is provide value. To your customer, to the community, and eventually to entire societies. Of course, getting there can be tough, but let’s find out how to do so.

To provide value is to fulfil 3 criteria:

You have a product/service that will improve a customer’s life

Your customer can access that product/service

The money needed to purchase your product/service gives less value to the customer than the product/service

Let’s go further into detail.

Firstly, to have something that improves the customer’s life means that you have to know what your customer needs or wants. Ask yourself questions like, who is my ideal customer? What problems have they been facing lately? Who do they wish to be?

Providing value doesn’t just have to be about solving issues that your customer faces. For example, Apple’s AirPods Pro does solve some issues that customers face, like curing the boredom of a daily commute by allowing them to listen to music and tune out the buzz of trains, buses, etc. However, a much larger part is the reputation that comes with AirPods. In my country, having AirPods makes you appear more professional and financially successful, both of which are traits many aspire to have.

By buying AirPods, people are buying the association carried with the product. Feeling that they have reached their aspirations of the type of person they want to be is therefore the value that AirPods provide to customers in my country.

Secondly, even if your product/service CAN provide value, it doesn’t mean it will. Largely, the difference between the two comes down to the supporting overheads like marketing, logistics, and accessibility to purchase. You’re going to need to get the correct people looking at your product/service and deliver it in a way that is appealing to them. Think about how your customer goes about their day, the media they look at, and the obstacles to overcome in needing to purchase your product/service.

For example, Amazon provides the incredibly valuable service of international shopping and selling. However, if they only shipped the items to their warehouses, and then made you collect your items from the warehouse, I’m sure you can agree that Amazon would never have been as successful as it is today.

Finally, don’t forget that to succeed is to be profitable, and that means you need to make as much money out of your superstar product/service as you can. Pricing is one of the hardest but unfortunately most important things a new entrepreneur will face because often times the creator cannot appropriately value their creation. Many will price their item in line with their closest competitor, thinking that if this guy sells it and can run their business, surely this is the right price for our industry.

This thought process can be fatal. You don’t know how the other guy’s business is doing, and in all likelihood, he’s not a pricing expert either. Even worse is that your product/service should be doing something other people aren’t which is how you provide extra value in the first place. So why charge the same for a better product/service?

At the same time, price consciousness is much more prevalent in consumers today, with many worrying that their wages won’t even support their basic needs. You need to give your customers value for their money, which is also how you create long-term customer bases for your brand. Again, think about the customer. How much disposable income do they have, and does the purchase of your product/service take up a large proportion of that? What is the opportunity cost for your customer in buying your product/service? In other words, what will your customer have to sacrifice in order to fit your product/service into their budget?

In all, the most important takeaway is that a successful business doesn’t come out of the nitty-gritty details, like cutting costs by a few dollars, or a perfectly designed marketing campaign. If your business provides value to a large enough consumer base, the money will come on its own, and so will profitability.

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