Firstly what is a key success factor? You probably have a good idea or even text-book definition. Although there is no limit I would suggest no more than five. Furthermore, when determining whether something is a key (or critical) success factor, ask yourself “If this were absent from my business would it fail?” If the business won’t fail it probably is not a key success factor.
I will use a general example related to small business success. Every business probably needs the following. This is not an exhaustive analysis, but a means to discuss key success factors related to small business success:
2. Products and Services
3. Marketing and promotion
6. Good management and leadership
7. Enough cash flow
To determine whether each factor is key I will not discuss each one in turn, but rather show how one could approach this in a “common-sense” way. Please note, the conclusions reached are not an indication of what ensures small business success, but an illustration of the thought processes that you could employ to reach a determination of which would be key success factors.
I want you to think only about what results you want to achieve. Firstly, you need to make a net profit (#9) (that is the profit after every expense has been taken into account). Secondly, to make a profit you must have customers (#1, 8) that will buy from you. Thirdly, you must have stuff to sell to the customers (products and services #2). It will be good and well to make a profit, but you need to have enough cash on hand (#7) to pay your bills, which requires that you collect your debts, or get paid in cash (always the preferred option). This is stating the ludicrously obvious, but this is my purpose – to illustrate that business in not rocket science, it is about some basic things which needs to be done well.
Now, what factors will ensure that you get customers and have products to sell? What is critical to achieving profit? For every key success factor you want to include, ask yourself it this will ensure that these three things are achieved, or not. For instance, it is unlikely that you will gain any customers without marketing and promoting yourself (#3).
Every item mentioned so far requires that you have staff (#4) do to the work, and that you have premises (#5) where you make your products, or serve your customers, etc.
One can take all day to discuss this, but after all is said and done, you want to know whether the factors you identified will make you more profit, more sales and more customers. If not is it really a key success factor that will ensure small business success?
Lastly, you have to manage and lead (#6) yourself and your staff. Every factor you identify as being critical to small business success, needs to be managed. Nothing happens by itself.