Critical success factors for starting a business
QUESTION: I would like to start my own beauty-care products. I specialise in natural handmade soaps and facial products. I know I should register the business, but what other advice can you offer prior to putting them out in the market so that this business can be a success?
— Soapmaker
BUSINESSWISE: Congratulations on your decision to monetise your passion by serving a wider community with your skills. Outside of business registration, there are several critical success factors that will drive the success of your business.
I’ll try to simplify these factors under the broad categories of people, product, processes, and market.
PEOPLE
Currently, you have no employees and no plans to hire anyone in the short term. By far the most important success factor will likely be you, specifically your capacity to effectively plan, strategise, launch, manage, and drive the development and growth of the business.
Globally, poor leadership is one of the main reasons many businesses fail. Locally, one of the main reasons is a propensity for entrepreneurs to engage in needs-based rather than opportunity-based enterprises. To put it simply, many get into business because of a personal need to create a job or income or to fulfil a personal passion rather than pursuing opportunities identified in the marketplace.
As a start-up with no employees or partners, you will be bearing the weight of many key roles in the business, including product development, sales, e-commerce, distribution, procurement, customer service, finance and accounting, manufacturing/ production, including quality control, and marketing, including brand management.
Each of these roles requires specialised knowledge, unique skills and competencies and various levels of experience. At a minimum, therefore, you will need to evaluate your capacity to fulfil these roles even in the very short term, and where you lack the requisite talent, you will either need to build your competence
through training or identify external resources to support these functions until you can afford to hire for those skills.
PRODUCT
There are several considerations when it comes to product, including the quality, effectiveness, pricing, comparative advantages over competition, packaging and labelling, to name a few.
If you created the formulation at home, it would be important to ensure that it meets Bureau of Standards Jamaica guidelines for finished skin- and beauty-care products if you intend to launch in and serve the local market. For other markets, you would need to research the specific standards and any other regulatory, product safety and market entry requirements.
In addition, for the product to be scalable, you would need to have a formulation that is cost-effective and resilient and one that has considerable shelf-life stability.
There are independent labs locally that can support you with this product-development step to ensure that your product meets the requirements. The Scientific Research Council is a very helpful resource.
Product branding and positioning are also critical here. This should be determined as part of your overall market-entry strategy once you have completed a competitor analysis.
PROCESSES
At the core of any successful business is consistency. Consistently maintaining quality, consistently delivering excellent service, consistently meeting and, hopefully, exceeding the expectations of your customers all require documented processes, policies, and procedures. Processes are at the core of scalability and quality control for any business.
Processes should also be efficient and cost-effective so that you are able to compete in what is a highly competitive landscape.
MARKET
To complete this list of general critical success factors, which is by no means exhaustive, would be market evaluation and strategy. Your market-entry strategy must contemplate where you will have the greatest competitive advantage and highest return on investment. The world is truly your oyster, and the options are bountiful. For example, e-commerce has opened a realm of possibilities to enter markets across the world more easily than ever before. One major opportunity in this regard is Jamaica’s recent designation as an approved seller on Amazon marketplace. It is important that you focus not only on the size of a market, or how wealthy or lucrative a market may be, but pay most attention to understanding the segments you wish to serve. This includes being initially acquainted with the demographic, their preferences, tastes, world view, stage in life cycle, concerns, and problems
Your sweet spot will be found in ensuring that your products meet their needs with a compelling edge over the competition that will make prospective customers decide to choose you. Many businesses fail because they didn’t put the customer at the centre of their product development or processes, and it is my hope that with the knowledge you have now gained, you won’t make that mistake.
Once you are able to address these major critical success factors, you are likely to be on your way to building a successful business. I wish you good luck, good fortune, and success on this new journey.
One love!