Enterprise success

Everybody wants to be more successful. But not everybody describes success using the same words. Many express success in material, usually monetary terms, because this is easy. A social entrepreneur will measure impact and an author their ranking on Amazon. Understanding what success means to you, is the first step towards contentment. There is no point in striving to reach a goal, only to find when you get there, that it has made you no happier than you were before.

The success of your enterprise should contribute to the achievement of your personal goals but will probably need to be more specifically defined. For example, your goal might be to be the most popular supplier of bread in your city, and you might measure that success by monitoring customer reviews, as well of course as seeing your shop sell out of bread by the end of every day, but you must also make a profit if your venture is to survive.

Charles Dickens summed this up well in David Copperfield explaining that expenditure less than income results in happiness, and expenditure greater than income results in misery[1]. In other words, if your bakery takes £1,000 a week, but your costs are £1,100 you will lose money and quickly go broke. The problem is that when you start a business, it’s all too easy to overlook some of your costs and so trade unknowingly at a loss. Let me explain.

You will have fixed costs that you cannot easily change, for example rent and wages, and variable costs that are directly linked to your sales, for example flour and jam to put in your doughnuts. But there are other costs that need to be factored in, for example holiday pay for your workers, business rates and insurance, which you might pay annually. These need to be factored into your calculation of weekly costs, so that you sell enough bread and cakes to more than cover them.

Of course, you could simply increase your sales price to a level that more than covers your costs and makes you a handsome profit, but this might reduce footfall in your shop when people find they can buy bread cheaper elsewhere. Part of the planning for your bakery, and something you should regularly update, is a survey of your competitors and a comparison of the prices they charge. But be sure you are comparing like with like, as there is more to a loaf of bread than meets the eye. An artisan hand baked loaf will command a premium over a plastic wrapped factory loaf, with a long shelf life buy little texture or taste.

By now you’ll be wondering what kind of bread you should be selling, and the answer is to be found just outside your shop door. What kind of people live in your neighborhood? Are they affluent, with BMWs in the drive, or are you on an estate of social housing with many reliant on benefits? Or perhaps you’re in a small village, where the only alternative to buying from you is to drive five miles to the nearest town?

Knowing the spending power and tastes of your customers is crucial as you decide what you will offer them and at what price. In general, the better educated and wealthier your customer, the more likely it is that they will buy specialist products at a premium price. People on lower incomes will buy what they can afford, and only buy more costly products, however good they taste, when they feel, they can afford to. It’s the provision of cheap food that makes McDonalds so successful, and the scale of their operation that allows them to buy wholesome ingredients at low cost.

It might be worth your while conducting a survey and asking local people what they would like your shop to stock. Be sure though to structure your questionnaire to limit the range of possible answers. Asking ‘what type of bread are you most likely to buy’, is too broad, but asking people to tick boxes to show preferences, such as brown, white, wholemeal, sliced, unsliced or organic will deliver results you can use. You could knock on people’s doors, but don’t overlook the power of Facebook and Survey Monkey to gather and organise responses. Both can be useful.

A market survey is useful in providing you with statistical date on your potential customers, but people’s buying decisions are based as much on emotion as logic. A useful way to think about people’s buying motives is to remember the mnemonic SPACED. This is something I have used over the years to good effect, enabling me to add value and appeal to my customers. Here’s what each letter represents:

• Safety – how safe is the product – for example about your food hygiene rating?
• Performance – how easy is the bread to slice or toast?
• Appearance – does it look appealing and does your shop look inviting?
• Convenience – how far are you from home and what are your opening hours?
• Economy – what’s the price compared with other retailers nearby?
• Durability – how long does the bread last before it goes stale and mouldy?

The decision to enter your shop and buy from you will be based on a combination of these factors. If you stopped a customer and asked them why the acted as they did, it’s quite likely you would be able to map their response against the mnemonic SPACED. It’s a useful checklist to use when planning as sometimes, you can add customer appeal without adding cost.

The final factor that can influence your success is your stamina and perseverance. Too many give up when they encounter the first hurdle, and the statistic that only 57% of start-ups are still trading after five years is daunting[2], but the art is to learn from experience and let your business evolve in response to market feedback. As Winston Churchill once said; ‘Success is not final, failure is not fatal: it is the courage to continue that counts.’

References

[1]Victoria Bischoff,  https://citywire.co.uk/funds-insider/news/the-friday-five-lessons-from-dickens-about-money/a565294, 10 Feb 2021, accessed 26.08.21

[2] Stacey McNaught, https://www.microbizmag.co.uk/startup-statistics/ January 2020, accessed 26.08.21