Is success of a business based more on the decisions or the idea?
I recently attended an event where one of the speakers talked about the large number of businesses that fail. She said that most business failures are less about the idea and more about the poor decisions made. I am curious if others agree with this. I think decisions are important, but also having the right idea is critical to success.
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The success of a business is based on relentless hard work, failing fast, learning quickly, and always being ethical and truly doing whats best for your customer. Making good decisions is more important for the success of a business than merely a good idea?
A great idea is only an idea until you make the decision to take action on that idea. Only then will you start to see growth and hopefully profit.
Additionally, what is a great idea? What you think is a great idea, I may think is a terrible idea, and then when you make the right decisions and eventually become largely successful, will I, the "expert" say "damn, why didn't I do that?"
Hope you enjoyed my thoughts!
Success depends on the confluence of ideas, decisions made, execution against the decisions made, timing, and a good deal of luck. You might want to check out Reid Hoffman's interview on This Week in Startups, you might find it enlightening (http://bit.ly/1Fl12IH).
I've watched friends and colleagues invest in their own start ups, and I've seen the main idea either grow or fall despite the intelligent or poor business decisions they're making. So to answer your question, I think success or failure is based on every business decision you make. But without a sustainable main business idea, there won't ever be success.
Many entrepreneurs come up with great ideas. Some work and some don't. Their decisions following those ideas are critical. Rolling up their sleeves and doing the hard work - creating a business plan, marketing plan, etc. and a timeline for implementation are key. Knowing when to delegate to others is really helpful. Testing their idea, being flexible enough to adapt and change, and accepting that disappointment is simply a pothole in the road are the hallmarks of those who succeed and those who do not. I have seen many people start businesses with an idea, but fail to do the work needed.
In a recent Innovation meeting where people come together to get help with start-ups, the speaker told the audience that the idea is worth 6% of the business. I would venture to say that the idea probably contributes to about 6% of the success of the business. The rest has to come from consistent persistent effort, AND the right mix of other ingredients.
I've seen businesses that blow me away by how successful they are when I look at how simple the product is. I know a man who had a hugely successful company where they mad custom painted hair barrettes with little girl's names. "How could this idea make a man rich?" I wondered. They only made about $0.20 profit per item. The answer is: SALES and DISTRUBUTION CHANNELS. The guy set up a network of specialty stores that had orders pouring in from all around the world.
Another example is the guy who started selling rice crispy cookies to gas stations. he and his wife made them in their kitchen after they had the idea, and wrapped them in plastic wrap. Nowadays, commercial kitchens must be used, but back then, they did it from home. They set up a network of gas stations buying their products, and got to the point where they were working 16 hours a day before they moved into a factory.
I know a guy who just invented a new process for 3D printing. His idea was revolutionary enough that he is signing a deal with a large Aerospace company, and he will need an manufacturing facility. Sounds like an easy dream come true...until you realize that he has spent $10,000 getting patents, and $25,000 in prototype costs, and lots of hours in the evening trying to perfect something over the past two years...and he has a regular job, so all this had to be done with extra effort. Nobody came along and said, "I'll fund your idea." He had to show a prototype before anyone would notice. Maybe this is how it all shakes out...Idea: 6%
Vision and hard work from founder to get there: 25%
Mentorship, or Connections: 20%
Manufacturing processes or production environment: 24%
Distribution channels: 25%