There are many reasons why some businesses succeed and others fail, or even why some grow more rapidly than others. Some of these are obvious: hard work, good luck, and a sound business idea will carry you a long way, while lack of effort, misfortune and ill-judged concepts are responsible for many businesses failing. But other contributing factors are often overlooked, and companies can and should address them if they feel they are not accomplishing all of their goals.
There are four main factors that economists agree have the most influence on the economic development and growth of nations. With a certain amount of tweaking, these can also apply to companies. While the overall health of the world economy will also influence your progress, analyzing your business in terms of these factors can help you to become more resilient, and to see where improvements can be made.
Human resources
Having the right people for the job is crucial to the success of any business. Many companies have suffered because of skill shortages in important areas, or simply because they have not been able to locate, recruit and hold on to the team members that they need. Companies require well-educated, skilled employees with the right attitude, but these employees also need to get the right level of training and support within the company.
It should be clear how vital the recruitment process is to the success of any company, but this is often rushed or not given the attention it requires. Joanna Riley founded Censia to improve the recruitment process by using predictive AI to find the best and most appropriate talent for any given vacancy. Using predictive intelligence avoids the unconscious bias human recruiters bring to the task, by focusing solely on the clearly defined skills, experience and personal characteristics necessary for the job.
Hanging on to talent
Once your company has found the right person for the job you need to make sure they want to stay. A competitive salary is important, and in-work perks like a generous pension scheme or gym membership can also help. But individual morale is also a big contributing factor. Do they feel valued, and part of a team working towards goals they believe in and which they are enthusiastic about? Do they feel challenged, but not out of their depth? Is there an opportunity for meaningful career progression?
Just as important as making sure your team has the right skills and the right attitude is making sure that they have enough work to do at a level commensurate with their abilities. Under-utilized employees will drag you down, as they become bored and look to move on, while you may find you’re paying them too much for the amount of work they’re doing.
Physical capital
This is the second-factor economists use to assess economic development, and in your company’s case, it means assets like equipment, machinery, vehicles, premises and so on. It’s important that you invest in this to the right degree, and keep it well-maintained and fit for purpose. Having equipment you don’t need or use however is a drain on resources, and relying on old or outdated equipment can cost you more than you are saving in terms of reduced efficiency.
Natural resources
In business terms, this could refer to anything you use and rely on that is not owned by your company, whether it is “natural” or not. The internet, the local transport network, and raw materials could all fall under this loose heading. Their availability, cost and how you make use of them can all affect your business’s success or otherwise. External local factors based on your location, such as labor supply, local demand and the availability of local suppliers and services are also important.
Technology
Failing to keep up with technological advances in your field can undermine your business. Applying the latest technology can enhance productivity, efficiency and improve the quality of your service and product. If you’re not keeping up then you can be sure that your rivals are. This could give them a competitive advantage that could prove fatal for your business.
These four areas broadly cover most of the factors that could help or hinder your business. Of all of them, it is arguably human resources that is the most important. The personality, attitude, and behavior of everyone on your team, including the boss, will be a major contributing element to how well your company does. This will in many ways define how well you manage the other factors mentioned and how well your company copes with the vagaries of fortune.
Disclaimer: This content does not necessarily represent the views of IWB.