Tips for building a sustainable business

Building a business is not easy. But just building a business itself is not enough. In today’s competitive landscape for every changing…

March 14, 2022

Building a business is not easy. But just building a business itself is not enough. In today’s competitive landscape for every changing need in consumers, staying in business is the bigger challenge. As a startup, it is important to focus not only on the product being built and the concept being formulated but also on the long term vision and goals for the business. This will allow the startup to build a sustainable business.
There are several best practices that can be incorporated in your business planning that can help build a sustainable startup.

Low Burn Rate

When building a startup, in any industry, there is an initial capital involved. This is unavoidable and, in most cases, absolutely necessary, for the business to be able to lift off. Most businesses realize very soon that once the product/service is out in the market, a significant cost gets incurred for operating the business. This sudden realization may happen if you haven’t spent enough time to think through how to execute and rather do things on the go. This could turn out to be a very expensive learning experience.

To avoid having high operational costs, founders must think of their execution model as well. This includes, but not limited to, the number of employees needed to run the business at an optimum level, the cost of employees, what is the turnover rate and cost, are there any other additional expenses such as infrastructure, tools and systems, seat costs etc. Every little addition counts at the end of the month and year, so careful planning of how to conduct your businesses day to day operations, budgeting and looking for the best options, is important to keep your burn rate low.

Focused on Revenue

Having a sound business plan and revenue model is key for any business. A plan that is not only focusing on 12 months but also has a long-term forecast from 3 to 5 years, will become important, as it also gives an understanding of where your business is headed. This roadmap will be key when making all your business decisions.
To ensure a sustainable business is being built focus on the revenue streams in the short and long term.

Profit Margins

Focusing on revenue and keeping costs low will help your business make profits. That doesn’t however mean that you must have good profit margins set when pricing is planned. When considering the price of the product, take time to learn about pricing psychology and profit margins against base price. This margin will ensure that for every product you sell your business is making a profit.

Whilst it is good to keep an eye on the profit margins, keep these margins under the radar as the price is a reflection of the value of the product rather than the cost.

First Mover Advantage

Be the first to launch in your industry. There is a huge advantage of being the first in any industry. First, it’s the most obvious of being known as the first such product/service in the market, which will have a lasting impression on your consumer base. The second, which is more important, is the added opportunity being first will give your business. Whilst your competition is studying your product and understanding how the market is responding to the product, you’re one step ahead of planning and maybe developing for the next level. This immediately puts your business ahead of the competition.
Being first is easy but staying number one is more challenging. This requires careful planning, research and development and continuous touch on your consumers and the market.

Predict Customer Behavior

No matter how great your business planning and product quality is, at the end of the day what matters is whether your consumers like it and want it. Hence, for any business to succeed, it must be keeping its eyes and ears open to understand the thoughts and behaviour of the potential customer.

The pandemic was a good example of how businesses either made it or went bust because of changes in customer behaviour. It is after-effects have created a new normal where customers are more inclined and comfortable to purchase goods and services via the internet as opposed to physical stores, as it used to be. This has created a new wave of tech and digital companies providing a multitude of products and services to cater to this changed consumer behaviour.

This may be one example but throughout history, market researchers have noticed how products and services align based on consumer behaviour and how doing so has helped businesses succeed over time. So founders must give this importance and spend time and budgets to keep on top of ongoing customer behaviour changes and trends.

Building a successful and sustainable business requires careful thinking and planning. Learning from businesses that had done well and failed will help new founders avoid making the same mistakes and apply only the tried and tested techniques. The tips compiled in this post are such tried and tested pointers from other founders and can be useful in your startup journey.