Key Success Factors Of Business (With Examples)

By Chris Kolmar - Jan. 19, 2021
Articles In Life At Work Guide

Find a Job You Really Want In

0 selections
Articles In Life At Work Guide

Emerging businesses hoping to gain momentum in their industry and eventually become long-standing competitors in the market are set up for an enormous task.

Transitioning into a successful company often relies on following through with an effective plan to achieve goals and objectives.

As an organization that caters to its consumers, comprehending the needs and values of a business’ target demographic is crucial to forming a logical strategy.

Identifying and understanding the five key success factors of business is the best way to establish a foundation of knowledge about a company and its customers.

Definition of the 5 Key Success Factors of Business

The 5 Key Success Factors of business is a theory of strategic business management posed by Buck Lawrimore. The concept was derived after the analysis of over 100 popular books and 20 years.

The key success factors are a series of five overarching aspects that ultimately determine a business’s long-term success.

The five larger groups contain ten smaller conditions, which need to be satisfied for the business to (hypothetically) thrive. In each of the world’s most profitable companies, the five success factors join together to establish a cohesive unit that’s lucrative for the long-term.

Below is a definition for each factor:

  1. Strategic focus. The strategic focus aspect of success means that the company’s goals, brand, and actions all move towards a targeted goal. The companies that manage to last in competitive markets are the ones whose leaders define their values and a realistic mission.

    This factor is about sticking to the ultimate business objective and ensuring that every project is an effort towards this. A significant part of the strategic focus is making sure that the target chosen is constructed from the customer’s wants and needs.

    Job type you want
    Full Time
    Part Time
    Internship
    Temporary

    Examples of strategic focus elements include:

    • Establishing and sharing core values that align with customers

    • Leaders of the business are devoted to upholding the business’ core values

    • The overall company mission is pursued through realistic goal-setting

  2. People. The second ingredient for business success is the personnel that makes up the corporation. A company’s staff is what expands its development, which means it’s crucial to hire a team that’s qualified, dependable, and passionate about performing well.

    This success factor also refers to how satisfied a business’ employees are with working there.

    Just as much as employees need to strengthen the business, the business needs to provide its team with adequate opportunities for success as well. Satisfaction with working for your business builds productivity and increases employee retention rates.

    Examples of the people elements include:

    • Hiring the most qualified applicants based on their skills and experience

    • The company’s employees fully understanding their job responsibilities

    • Employees are given the chance to provide meaningful input on business decisions

  3. Operations. The daily and long-term functioning of a company is defined as its operations. The specific operations that a business handles differ depending on the industry it exists in.

    For example, the operations of a company that produces jeans likely involve sourcing materials, product creation, and generating sales. The business operations of a pediatrician’s office would be very different.

    For operations to be successful, the functions need to be recorded and have a measurable efficiency to determine if the processes need tweaking over time.

    Examples of the operations elements include:

    • Processes focused on providing excellent service to the customer

    • All operation efforts being documents and trackable over time

    • Procedures being continually evaluated to ensure effectiveness

  4. Marketing. Marketing acts as the branch between a company and its customers. There are many facets to good marketing, such as targeting the right audience, forming a recognizable brand, and evaluating consumer satisfaction post-purchase.

    Marketing attracts new customers to your brand through media communication, supporting business growth. Without its customers, a business is quick to fall flat on its face.

    Examples of marketing elements include:

    • Defining a target marketing audience for the business

    • Expanding the customer base through media communication and advertisements

    • Eagerly receiving customer feedback and using it to improve

  5. Finances. The final factor of success is often the first one that people’s mind jumps to when they consider the term, finances.

    A company’s finances refer to the entirety of its assets, which include things like sums of money, properties, and materials.

    In addition to maintaining the company’s financial data, it also includes their product’s financial characteristics. Pricing has a considerable impact on how customers perceive the product and how well it sells.

    Examples of the finances elements include:

    • The products are appropriately priced for a profit to be made while still attracting and maintaining customers

    • Keeping track of finances for a better understanding of company health

    • Every employee of the company understands how their actions affect profits and finances

Definition of the Critical Success Factors

Critical success factors are a business management framework similar to the Five Factors, but it’s composed of the elements necessary to complete a project. It’s a checklist of qualities that enable a professional goal to be accomplished.

Unlike the Five Factors model, critical success factors do not outline the success of businesses. Rather, they describe what needs to be done to achieve and provide a reliable system of measuring success.

A company’s critical success factors vary greatly depending on the circumstances of their industry, competitors, and what their goals are.

A business that sells alarm systems to homeowners might look at sales and the percentage of customers who left positive reviews to quantify their success.

Alternatively, a social media manager would consider their critical success factors to be the number of new customers generated monthly and website traffic.

How to Determine Your Business’ Critical Success Factors

  1. Gather a group to manage critical success factors. Before beginning work towards establishing a business’ critical success factors, gather a team to handle the matter.

    Delegating tasks ensures that nothing gets overlooked. The main participants in this group should be senior employees since they are the most experienced in the business and on the team.

    Many companies also bring in an unbiased consultant to help determine and form a strategy around critical success factors, but this is not required.

  2. Request feedback from employees. A company’s employees are its eyes and ears. As such, they usually have extremely valuable insight into what a business needs to do to succeed in long-term goals.

    Once a team has been established to work on critical success factors, send out a memo requesting feedback from employees. The ideas, comments, and suggestions of an organization’s employees can significantly enhance its achievements.

  3. Develop business goals. Before evaluating the conditions needed to accomplish an objective, the business first must set its goals.

    Both long and short term goals need to be considered when developing the pursuit of a company. Be sure that the goals the company commits to are realistically achievable.

  4. Consider what is needed to achieve these goals. This is the part where critical success factors come into play. Now that a list of achievable short and long term goals have been set, think about what steps need to be taken to achieve them.

    The elements required to reach a goal describe the company’s critical success factors when it comes to that particular project.

    For example, a restaurant whose long-term goal is to improve its profits by 6% might take on the critical success factors of improving customer satisfaction and the quality of their food.

    Put together a list of the critical success factors that are the most crucial to the goal being met.

  5. Put the plan into action. The beauty of critical success factors is that they map out a strategic plan for completing a professional goal. With an inventory of the most essential success factors settled, the only thing left to do is explain and execute the strategic plan.

    To quantify the effectiveness of critical success factors over time, establish a measurement system. With a goal involving an aspect, like sales, measuring success is straightforward, but that’s not the case for every critical success factor.

    For example, a business hoping to improve its customer satisfaction might measure its success through the number of return customers or positive reviews on Yelp.

  6. Observe and evaluate as needed. A strategy based on critical success factors has been put into motion, but that doesn’t mean the job is done.

    The long-term goal and critical success factors must be continually observed to see if changes are required. Reevaluation and tweaking over time secure that the business is on track towards its goal.

Examples of Broad Critical Success Factors

  1. Strengthening employee satisfaction. Employees are the backbone of the company they represent. This means that boosting employee satisfaction is often a relevant critical success factor in improving other aspects like productiveness, regardless of industry.

  2. Improving sales and profit. Since many businesses survive off of maintaining sales and profits, it makes sense that it’s a popular critical success factor. Improving these finances is implemented as a critical success factor when the long-term goal involves needing increased funding.

    For example, a dog groomer who wants to expand their business by buying a second location might address the success factor of improving sales to buy the new property.

  3. Brand awareness. Customers need to know that a business exists for it to survive among its competition. A lot of companies feel this pressure and choose to focus on brand awareness as a critical success factor.

    Building up a name for a brand helps solidify standing in the market and assists in working towards a variety of long-term goals.

Take the hassle out of your job search & get an offer faster
Chris Kolmar

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.

Find The Best Job That Fits Your Career

Major Survey Entry Point Icon

Where do you want to work?

0 selections

Related posts