How to define business success

By Francis Wright
A universal definition of business success has not yet been identified and as a result, entrepreneurs are striving towards unknown factors; with no definition there is also no measurement of business success. Various scholars have attempted to define business success, for instance, Brockner, Higgins and Low (2004) defined entrepreneurial success as the extent to which the needs of the stakeholders are met and held that success can be sustainable or short-lived. They warn that sustainability is only achieved when the resources of the organisation are not depleted in the quest to satisfy the needs of the stakeholders.
Watson, Hogarth-Scott and Wilson (1998) attributed business success to a complex set of interrelated factors that increase the probability of success and held that when those factors are aligned and implemented, business success will be achieved. Scholars such as Jemison (1987) have said that business success is achieved when the complex relationship between strategy, processes and business performance is aligned and all work together to the benefit of stakeholders.
The factors mostly used as a measure of business success by scholars such as Gronholt and Martensen (2009) are profitability and business growth in turnover as well as employees. Other factors used include the ability to navigate around market conditions, the ability to increase productivity, well-executed vision and goals and being a preferred employer. Joyce, Nohria and Roberson (2003) believed that a clear strategy, operational excellence, excellence in performance, flexibility, employee retention, innovativeness, commitment and growth define business success.
Rauch and Frese (2000) used the Giessen-Amsterdam model of entrepreneurial success to measure business success. This is an interdisciplinary model which assumes that there is no success without action. Manion and Cherian (2009) insisted that perceived business success is measured by sustainability, business growth, profitability, customer satisfaction and market position. They stated that entrepreneurial rewards include profits, growth, return on investment, self-actualisation and validation. Other scholars such as Pena (2002) and Davidson, Steffens and Fitzsimmons (2009) measured business success by growth and gross profit margins.
Through the ages many formal measurements of business success have emerged; the Du Point pyramid of financial ratios, the Balanced scorecard, the Dynamic multi-dimensional performance framework and Neely?s Macro process model. Walker and Brown (2004) measured success by the achievement of personal goals for the entrepreneur. Johnson and Soenen (2003) used five business growth indicators as the basis from which to measure business success, being; the size of the business, profitability, capital structure, liquidity, cash conversion cycles and earning volatility. De Brentani (2003) developed seven keys to measuring business success. During her research she found that business success is measured by the fit between the need of the customer and the solution offered, having expert and efficient front line employees, offering unique competencies, a culture that enhances creativity, good market potential, innovativeness and senior management involvement. Other measurements of business success, such as growth in turnover and employees, are relevant but without the seven key measurements identified, the state of success will not be sustainable.
After much research and interrogating the work of many scholars, a universal measure of business success can be summarised into four categories; sustainability, business growth, profitability and customer satisfaction. As a result of in depth literary research conducted in an attempt to define business success, the following definition emerged; a successful business is a business that provides all shareholders value in some form or another, has a dominant strategy, with a clear vision. It is an organisation that is innovative and outperforms the competition in a manner that will lead to increasing turnover, operating at maximum productivity and quality at minimum cost while offering employment, adding value to customers and contributing towards the broader community. A successful business uses assets, such as human capital, finances, inventory and plant and equipment efficiently and effectively while being environmentally sustainable. The successful business is a vibrant, growing organism that is sustainable and adds to the quality of life and wealth of all involved. It is important to note that business success is never a given, or a destination. It is a continuous journey, which could end at any time through changes in any one of the variables that could impact on business success.
At the end of the day, as can be seen from the above, business success can be measured in various ways and defined in even more. But can an entrepreneur ever say that business success has been achieved, when there are so many variables impacting on the status of success? When a small business grows into a corporate and yields profits over a period of many years, then the market turns, new technology is developed and suddenly the market disappears, can that corporate then be called successful or is it a failure? The status of business success is an ever changing phenomena and the role of the entrepreneur is to strive towards success and the sustainability thereof on a continuous basis. Business success can be defined and measured at any given point, but ultimately business success is a journey and never a destination.