A woman selling eels and other fish in Hsipaw, Myanmar. Photo: Andrew Philip

From: Entrepreneurship – Footsteps 103

Practical advice on how to run a successful business

Everyone deserves the opportunity to earn a livelihood, provide for their family and support their communities. Jobs and economic opportunities are a vital pathway out of poverty. For many people, starting a business of their own can be empowering and life-changing. However, great talent and good intentions are not necessarily a guarantee of a successful business.

What does business success mean? 

A business is any organisation that makes goods or provides services. There are many types of business. These range from small enterprises owned and run by just one person, through to large companies which employ thousands of staff all over the world. An entrepreneur is someone who sets up a business. 

One of the most important aspects of business success is earning a profit. A profit is the money you have left when you have received all of your income and have paid all of your operating costs and loan repayments during a certain period. 

Small businesses that do not make a profit will eventually have to close. However, there is a lot more to success than just financial returns. Some businesses operate as a social enterprise, which creates social as well as financial benefits. These businesses will often accept lower financial returns in order to bring about greater social impact. For example, the company Sanergy uses a business approach to tackle the sanitation crisis in Kenya by making hygienic toilets affordable and accessible in Nairobi’s slums. 

Business success is also determined by how ethically a business conducts itself. Businesses can choose to follow environmentally responsible practices and provide fair wages and good working conditions for any employees. 

What does a business need to succeed? 

There are a number of common skills and attributes that a successful entrepreneur and/or business will display:

Some businesses fail because there is no demand for the product in the market. Illustration: Petra Röhr-Rouendaal, Where there is no artist (second edition)

Some businesses fail because there is no demand for the product in the market.

Why do some businesses fail? 

Just having a good idea and motivation is no guarantee of success. Here are a few common reasons why businesses can fail: 

Knowing and being able to reduce some of these potential challenges will make your business more likely to succeed – but of course, there is no guarantee! However, if you do fail, it can be a great opportunity to learn from your mistakes and to use these lessons to succeed next time. Studies of successful business owners have shown they attributed much of their success to building on earlier failures. Before his eventual success, Thomas Edison, who invented the lightbulb, said, ‘I have not failed. I’ve just found 10,000 ways that won’t work.’ 

Claire Hancock is Tearfund’s Global Livelihoods Lead. 

Email: claire.hancock@tearfund.org 


Knotty problem 

Question: 'How can I find the money to set up or expand my business?' 

Answer: The first source of finance you should consider for your business is your own savings, or money you can raise by selling any spare items. The second source you should consider is your family and friends, and their savings. This is because the interest rates on small loans can be very high, and you could find this a considerable burden on your business through the first few months. Borrowing from family and friends can save you a significant amount of money. 

Another alternative is savings and loans schemes. These are local groups of about 15–20 people, who each bring their savings together regularly. The group makes loans to its members, and the interest is kept by the group to increase the amount available to lend to other members. The schemes elect their own officers, make their own byelaws and set their own loan terms.  

Banks are a difficult option because they are usually not geared up to deal with the small loans that you are likely to be considering. Microfinance organisations are the main alternative to family funding or savings and loan schemes. These organisations are set up to offer small loans and other financial services to people with low incomes. However, do check the interest rates and repayment terms to make sure they are reasonable. Visit www.microfinancegateway.org for information on microfinance organisations in your region. 

Whichever source of funding you choose, your business plan will help you plan your income and how and when to make loan repayments. 

Answer adapted from Setting up a biblically based business by Michael Clargo.

Written by

Written by Claire Hancock

Claire Hancock is Tearfund’s Global Livelihoods Lead. Email: claire.hancock@tearfund.org

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