Knowledge is power! How to spot a small business that is guaranteed to be successful -By Nwosu Chidiebele

Introduction

How does a small company become very successful? What are the early signs of success in business? What do successful businesses all have in common? Despite the negative news of small business closing or moving, thousands of small business start-up succeed. A good percentage of those companies have learned what it really takes to survive the early start-up years and become successful enterprises. After studying a lot of these companies, I discovered that the successful ones share some common traits.

Scalability:

The key to having a business that will be successful and generate a lot of profit lies in the word ‘scalability’. It is the ability to expand operations over time. To understand more, it is the ability to take it, start small and grow it to serve a lot of people or to serve a whole continent.

The key question, ‘Is the business you are doing now has the potential to grow into every country in West Africa? Not every business has this quality. The ones that do are the ones that can really earn you a lot of profit. It will start generating much profit even before it becomes so big. There is a formula of an exponential increase due to business expansion.

Check it out!

1 raise to power one is one…raise it to power 2 is still one. Even if you raise to the power of 50 is still one.

However, here is where the magic start happening. It starts with power 2.

2 raised to power 1 is 2. 2 raised to the power of 2 is 4. If you raise to the power of 3, it becomes 6. It keeps expanding from two, three, etc.

This law also operates in business. If you have a shop serving just your area, your profits will never increase exponentially but when you open another shop somewhere else, and another one and more, then, your profits skyrocket through the roof.

Have you understood? The reason the CEO of ‘God is Good Motors’ is rich is that he has more than one bus (an exponential increase).

If your business does not allow an opportunity for scaling up, you are not building a business rather you are chasing an opportunity to make little income and run out of customers. Now, you ask yourself if your business can be scaled. If it is not and you hope to make a lot from it, then it won’t work.

The Power of being Expensive

Next, you are going to discover one little tip that can double your profit easily. Honestly, it goes against everything you have ever learned about business. In school, you were taught that ‘The lower the price, the higher the demand’.

The problem with charging low fees is you attract difficult people. These clients who are charged low prices are a pain in the ass, sometimes they will call at night, make crazy demands and practically all over you begging you make sure their money doesn’t waste because it’s their last card’’.

As one got better at his game, he should increase his fee. The demand for your services can drop but you earn more.

Let me show you something.

Let’s assume you sell an online course for N7000. How many sales do you think you will need to earn 1 million naira? 143! One hundred and forty-three. Now, if I increase the price to N50,000. All I need this time to hit 1 million naira is to sell only 20. Will the demand be low? Yes, but it will be way easier than selling 143 pieces for N7000 each.

When you increase your fee, you noticed something happen. You started to repeal some certain kind of people who couldn’t afford what you are charging. You know what? The ones that pay don’t worry about money. All they were interested in was a result. You will start attracting people who were already making money but wanted to just double it. To them, the fee wasn’t the problem, their interest is getting expertise. So let’s talk about it further. What are you selling? But then, have a range of products. There are people that want cheap stuff, there are also people that want luxury.

This the reason you have one plane but two sections – Economy class and first class. And people still fill them up. People even desire expensive more than cheap things. Do you know everyone wants to wear designers? Everyone wants to be VIP. The question lies on who you want to attract to your business. But I will suggest you should have an upper product for your business. If you have a barbershop, why not have a regular side with just barbing services and a VIP section with free wine, manicure and free hair dying. You will be surprised people would pay double the price of the regular fee in order to get in on the VIP section. This is one of the surest ways to increase your profits in business.

Nwosu is a business manager and CEO, Cpraxis Integrated Services.