The 10 critical success factors. When we think about critical success factors, we ask ourselves: what differentiates the most successful companies from those that fail? What are the factors that determine that a project is successful? And how can we apply them in our businesses?
Over 60% of new companies fail in their first three years. Of the rest, only a minimal percentage is successful.
Although business success factors are multiple and depend on each company and business model, there are some that we could consider universal.
In this article, we will look at the ten most common critical business success factors. If your organization complies with these keys, you will have more options to be one of the few companies that succeed.
What do the critical success factors of a company mean?
They are those elements that help shape a business, leading it to success and making it better every day. These are born from a constant evaluation of business development. And in which those things essential for the emergence and growth of any business are determined.
But these factors cannot meet your goals if they are not well executed. Even if you have all the necessary conditions to move your company forward, properly using the tools you have at hand so that the critical success factors have a conducive environment is essential. Otherwise, you won’t get what you want.
In addition, if at the moment of undertaking you deviate from these critical success factors, you will contribute to their failure. Therefore, it is necessary that you know them and look for a way to apply them in your company.
10 critical success factors of a company
1. Have a good business idea
Although a good idea is not always synonymous with success, most good businesses start with good ideas. Having the “next Facebook” is not the same as trying to launch a company with a more than-used concept.
In any case, we must bear in mind that a business idea is only the project’s starting point. The idea can evolve and change over time, and therefore, what at first may not be a very good idea may become an excellent one later.
2. Have the capital to carry it out, the 10 critical success factors
Another critical success factor is to have the necessary capital to launch your idea. To a greater or lesser extent, all opinions and projects need an economic investment to move forward, from the monthly hosting of a small online store to the purchase of airplanes from a new airline.
To apply the critical success factors in a project or business, a financial plan must be prepared before launching an idea. All costs are taken into account before reaching a possible break-even.
The capital invested during all the time that it costs us to launch the company and that is in losses will be the gasoline that allows us to continue. For startups, business models that rely on investment rounds in the early stages of development are even more critical.
But to achieve the investment required in each of the rounds, they will have to complete some minimum objectives that would largely determine the interest of investors in the project.
3. Get the right timing, the 10 critical success factors
Being in the perfect place is not enough. We must also be at the right time. How many businesses have they lost by being too late? There are even companies that have failed because they arrived too early. An example of this is virtual reality.
Now that internet connections have advanced, processors are faster, and there is much more content available, virtual reality is starting to be one of the most profitable businesses.
It is one example of a company’s critical success factors that allow you to understand the importance of seizing the moment and not delaying or anticipating the opportunity. An analysis of the environment done in advance and carefully developing the business plan will help you determine the perfect time.
4. Build a good strategy, the 10 critical success factors
We can have a good business idea, the capital necessary to carry it out, be in the right place and time, and still fail. Why? By not taking into account another of the main critical factors of business success: Strategy.
The strategy is the action plan that we have to design to achieve our objectives. It consists of determining how to use the available resources to achieve the desired business objectives, generating the least possible waste.
The strategic plan is a mixture of vision, mission, and ideas to achieve the company’s goals. We must bear in mind that the strategy is not something static but that it evolves as the business does; it adapts to the context, needs, and changes in its objectives.
5. Get a great team, the 10 critical success factors
The people behind a project are another critical factor in business success. A good project will have a much better chance of success if it comprises a talented team: people capable of achieving its objectives and doing so at a higher level than the industry average.
But a great team is not just a question of individual talent. People must work in a coordinated and effective way so that the company’s overall performance is much higher.
Real teamwork is the unfinished business in many companies; Some believe that they work as a team only because they are working on a joint project, but this is not teamwork. It is group work.
Motivation and confidence are also essential, as having an excellent work team are not consistent enough. Encourage everything in your hands so that everyone feels comfortable, which is an integral part of the project, and you will see how everything is giving results.
6. Have fluid communication and coordination. There are no silos
Large companies like General Motors have failed because of their inability to innovate. This is not because they have not invested money in R&D, which is part of the critical resources of a company, since they have done it in large quantities.
The lack of interdepartmental communication and coordination made it impossible for truly disruptive innovations to emerge.
When work teams in a large company do not communicate, well-known information silos are created. These are watertight compartments of information that are not shared with other groups in the company.
The lack of communication between these groups prevents innovation, generating many problems with different perspectives. If, for example, the product department and the user support department do not communicate with each other, they will never find solutions to the most frequent user complaints.
It is for this reason that communication and fluid coordination, each one of them, are essential in business development.
And this happens not only in large companies. This same problem also exists in small teams consisting of a few people who dedicate themselves to doing their work and do not share it with their colleagues.
7. Possess a good capacity for innovation and adaptation
Businesses change. It is done by the markets, the economic environment, the competition, the context, the technology, or our users’ needs. Everything changes and advances very quickly, and that is why a business must have a good capacity for innovation and adaptation so that all these changes do not leave it out of the game.
A great example of this is the American automobile industry. With everything going for it, it could not innovate and adapt to the market’s changing needs.
Big manufacturers like General Motors or Chrysler went bankrupt. At the same time, other new players like Tesla could start from scratch and create a business in an industry that seemed to collapse entirely.
This shows us that companies do not fail just because of poor economic conditions, which may result from misapplying critical success factors. If you have a flexible vision and are open to innovation, the business thrives and is ready for any change.
8. Be ready to compete, the 10 critical success factors
Competition is another critical factor in business success. They say that competition is good for business as it forces entrepreneurs to innovate faster, offer a better product, and better support.
But the reality is that it is better not to have competition than to have it because it can impede the success of our businesses in many cases. It is not the same to compete in a market that has collapsed due to the supply of other companies and in which it is difficult to gain a foothold, then in a need in which there are still no alternatives, and we are the only and main actor.
The more competitive a business niche is, the more difficult it will be to succeed within it. In addition, we must bear in mind that competition is a variable factor throughout our projects.
We can enter a market free of competition and over the years it becomes an ultra-competitive market due to the ease of access to it. For this reason, innovation is important because it helps us maintain a competitive advantage over our competitors.
It is essential to be ready to compete, regardless of whether the market is saturated or not, as great entrepreneurs never stop doing so. It seeks to improve, innovate, and offer the best because you will be prepared when the real competition arrives.
9. Take into account the context and economic environment
One of the most important critical success factors of a company is the economic context and environment. These are all external factors that can positively or negatively impact our business and are beyond our control.
For example, suppose a party that wants to promote renewable energies enters the government. In that case, it will create a favorable context for all those companies that work in the renewable sector.
Similarly, suppose global warming causes governments to ban the use of coal to produce energy. In that case, it will be a negative context for all companies dedicated to the extraction and exploitation of this material.
Context and environment are essential in determining business success. We must always be up to date with the news in our sector to discover new business opportunities or possible dangers that we have to anticipate.
The capacity for innovation and adaptation is essential to cope with changes in context and environment. For this, the SWOT matrix and the PESTEL analysis are handy tools.
10. Have good leadership, the 10 critical success factors
Without a doubt, a good leader carries out any project. We see this applied in thousands of businesses worldwide, as in the case of Virgin, in which its leader has an unwavering commitment to the brand and takes it to levels that no one would have imagined.
A good leader commits to all the critical success factors to make it unbeatable. This does not mean that the team is not needed, as we have already seen that it is one of the essential elements, but leadership cannot be lacking.
All the factors of a company are essential to building a good business, but there are some vital ones that you must take into account for your company to achieve its goals. These are called critical success factors.
When these factors are not taken into account, whether at the time of undertaking or improving the company’s life, one has a foot closer to failure. Therefore, it is necessary to know and apply them on time.
For any leader, it is essential to take advantage of the knowledge that comes from the analysis carried out by experts in entrepreneurship and business growth. If you ignore the critical factors for a company’s success, you fall into mistakes that many have made that have led to failure.
Now that we have seen these 10 critical business success factors, it is time for you to analyze if your project meets all of them. If so, you will be a little closer to meeting your goals. We invite you to do it now that you have the opportunity to get down working to solve any fault.