August 31


What Makes a Business Successful? Let’s Name the SINGLE Most Important Factor

By Aidan Montague

August 31, 2020

Here's a challenge. How can you tell if your business is going to be successful? What is the number one ingredient that will virtually guarantee success?  Now, I am particularly focused on young and growing companies, that deliver complex products and services. e.g. technology and engineering startups - but the argument holds up for almost any business - even small local ones.

There is ONE overwhelming answer that hardly anyone is aware of - or acts on. And, it is likely NOT what you think!

See if you can guess without scrolling to the bottom to read the answer 🙂

Is it the ability of the leader?

No. There many leaders with enormous ability and skill but still the companies they lead are unsuccessful. You just have to look at the world of technology startups. Many of these young entrepreneurs have enormous ability but still greater than 90% of startups fail. Conversely, there have been many leaders with just average ability that gone on to be outstandingly successful.

Is it how hard the team works?

No. Absolutely not. Many teams work long hours and put their heart and soul into the business but still are not particularly successful. That is the harsh reality. Unfortunately, if a venture requires that much hard work, it is usually an indicator that the business cannot succeed without it.

Is it having the right MIX of people?

To a point. Yes, it is true that every venture requires the right mix of entrepreneurship and people, with their feet firmly planted, to just get on with doing the job. Yes, no business will succeed without the right mix of people - but it is still not the determining factor. Many businesses have a good balance of people but yet they never amount to much.

Is it the sheer quality of the people (and the early partnerships that they strike up)?

If you said "yes" to this one you would be in agreement with most venture capitalists. The cliche in the venture capital world is that there are three reasons for success - PEOPLE, PEOPLE and PEOPLE. However, what normally happens is that the business starts off on the wrong track and because the people are good they gradually course correct (through a process of trial and error) until they find a formula that works. 

However, we shouldn't have to rely on a team of superhuman people, working their tails off, to ensure that the business is going to be successful.

Certainly one of the most prominent venture capitalists in Silicon Valley would agree - Don Valentine who backed my old Company, Cisco and a host of others including Google and Facebook (plus his share of failures that no one has every heard of).

Don Valentine was legendary in the "Valley". However, he openly admitted that he did NOT back PEOPLE (primarily). He backed MARKETS. You can find out more here - The Wisdom of Don Valentine

So, if it is not all of these things, then what the heck is it?

Well, according to investor and author Richard Koch, in his magnificent little book called The Star Principle, the useful answer is NOT:


Richard goes on to give a very precise definition of the types of companies that he believes are well positioned.

He calls these businesses STARS. The term was originally coined by the Boston Consulting Group (BCG) with their BCG Matrix. A STAR business can be defined as follows:

  1. It is the leader in its market niche (can be a local leader in some niches)
  2. The market niche is growing fast, at least 10% a year
Richard has amassed a fortune of more than US$200 Million by investing ONLY in STARS.

Now STARS are rare but they are out there. You can also create one for yourself. STARS can be designed - even in a relatively small local market.

You first have to chose a fast growing segment. And yes, even long-established niches such as engineering, health care and hospitality, have fast growing segments within the niche. You must identify that fast growing segment - or create your own little segment that you can dominate.

You then have to make sure that you have a realistic chance of becoming a leader in that "sliver" of the market. That may require repositioning. 

Here is a brand new FREE Report that will help you to reposition the business so you will shorten sales cycles and clients will be happy to pay more -  TECH RESET - Reposition Your Business - Download Now.

For some companies, this may be a niche within a niche or a  local business. For most tech startups, because of the frictionless nature of the internet, you will need to have a realistic chance of becoming a leader yourself OR being acquired by a much bigger player.

Word travels fast in the tech world and if there is a better solution out there, the market will find it at lightning speed. 

So, now you have the recipe that virtually guarantees business success. Remember, most startups have a 90% plus failure rate. If they had set out to design a STAR business from the outset, many more would have survived.

I will leave the last word to Richard Koch himself...

“Altogether now. What will make you successful? Positioning will. A STAR business will. In terms of improving the odds, nothing else comes close” - Richard Koch - Author & Investor

So, what do YOU think?

Do you agree or disagree that POSITIONING is the #1 indicator of success? I know that not everyone will agree. I certainly didn't - until I examined the argument with an open mind. I would be grateful for your comments below. 

Also don't forget to grab your FREE Report - TECH RESET - Reposition Your Business - Download Now. Shorten sales cycles and increase your margin on products and services that you already offer.

Aidan Montague

About the author

Aidan Montague is a Professional Engineer with a unique combination of engineering/technology experience together with over 25 years of sales & marketing experience. He was instrumental in the establishment and growth of the Australia arm of internet/communications giant, Cisco Systems. He also has had extensive Board experience on both ASX listed and private companies in Australia.

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Essential reading for all technology and engineering groups. How to reposition your business to thrive in a post-2020 world.