This week the Mississippi Business Journal focuses on the state’s larger private companies.
What makes one company get big while most others either stay small or fall by the wayside? What’s the magic of starting small and growing large?
Each of the companies listed this week would have a different answer to that rhetorical question. Some say luck is involved. Some point to a strong founder. Others point to a unique product or service. All agree that tenacity is critical. Some years are better than others, but a secret to survival is hanging on until things get better.
Strong founder? Luck? Tenacity? Committed employees? All of these elements play an important role in developing a big company. Since each company has its own unique story, perhaps it would be helpful to identify some of the “must haves” for a business to prosper over a long period of time.
The first thing required for building a successful business is leadership. Some call it management, some entrepreneurship, but by whatever term you choose, somebody has got to have the magic to get things started and keep them moving. This person must have high energy, drive to succeed, courage and a clear vision of where the business is going. These individuals are rare. However, when one surfaces, they will lead the pack and not be satisfied until things are moving.
The next thing a business must have to succeed is a plan. It may be formal or informal. It may be written or exist solely in the mind of the founder. It may be bound in a fancy binder or written on a restaurant napkin, but a plan is essential to success. The plan must contain the basic elements of every business: capital, customers and staff. The staff may be one person and the capital may be a few thousand bucks, but the elements are essential and must be thought out and planned.
Every business must have customers. Let’s face it, the best-laid business plan in the world will fail if the company does not have customers to buy its product or service. Getting, and keeping, customers deserves and receives a big chunk of management effort. In fact, the more effort put into satisfying customers, the more successful the business is likely to be.
A source of capital is a necessary ingredient. Personal savings, a second mortgage on the house and loans from banks or relatives are all potential sources of capital. As the business grows and develops a track record, stockholders and bank lines of credit usually supplant personal savings as the source of capital. Larger, successful companies retain a portion of their earnings to provide for future growth and liquidation of debt. Short-sighted business owners spend all the company’s earnings, or pay it out to themselves, and never develop the capacity to grow.
Somebody has got to do some work for the business to be successful. Initially staffing may be limited to the business owner and family members. As the business grows employees may number in the thousands. The ability to attract and manage a good workforce is essential for growth of the business.
What do our 100 largest private companies have in common? They have all amassed an appropriate level of customers, capital and staff. They all have strong leaders who keep the other elements of business flowing and growing. Some of them have been around a really long time. Others are newcomers on the scene. As the economy twists and turns and new inventions and customer preferences supplant today’s products, some of the companies will anticipate the changes and prosper while others will fall by the wayside.
While the huge, multi-national companies coming into our state get lots of press coverage, and we’re pleased they chose to come here, it’s really the private companies that create most of the new jobs. And it’s on them that we depend for expanding our economy and raising the standard of living for all Mississippians.
We applaud the successes of Mississippi’s largest private firms.
Thought for the Moment — Blessed is the man who perseveres under trial, because when he has stood the test, he will receive the crown of life that God has promised to those who love him. — James 1:12
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.