What Makes a Business Successful?

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Edexcel IGCSE Business

What Makes a Business Successful?

Big idea: A business is "successful" when it hits its own objectives — and those objectives can be about money (profit, revenue, market share) or about people being happy (customers, staff, owners) — while businesses fail mainly because they run out of cash, are managed badly, get hit by outside forces, or grow faster than they can handle.

Quick Summary

Success = achieving objectives, and it's measured in two ways: financial (numbers on a spreadsheet) and non-financial (how happy people are).
The 5 financial measures: revenue, market share, profitability, business growth, shareholder satisfaction.
The 3 non-financial measures: customer satisfaction, employee satisfaction, owner satisfaction.
Businesses fail for 4 broad reasons: financial factors, poor management, external factors, and overtrading.
New businesses fail more often than established ones — usually due to inexperience, cashflow problems, and weak market research.
Making a loss ≠ failing. Many young businesses lose money on purpose early on because they're investing to grow.

1. Measuring Business Success

Here's the first thing to get straight in your head: "success" isn't one single thing. A tiny bakery that just wants to cover its bills and make the owner happy is successful if it does that — even if it never becomes the next McDonald's. A huge public company might be "failing" in the eyes of its shareholders even while making millions, if its competitors are making more. Success is always judged against the business's own objectives.

That means we need two completely different lenses to check whether a business is doing well: a financial lens (does the money add up?) and a non-financial lens (are the humans involved — customers, staff, owners — actually happy?). A business can score well on one and badly on the other, so examiners love asking you to weigh the two up.

Think of it like a school report card

Your grades (financial measures) tell part of the story — but so does your attendance, effort, and how your teachers rate your attitude (non-financial measures). A student could have great grades but be miserable, or be happy but underperforming. A full picture needs both.

Financial Measures of Success

These are the numbers-based indicators — often called Key Performance Indicators (KPIs) because they're the figures managers watch most closely. There are five worth knowing in real depth.

Measure	What it actually means
Revenue	The income earned from selling goods/services (before any costs are taken off). You compare it over time (is it rising year on year?) and against competitors (are we outselling them?). Rising revenue suggests the business is growing and its decisions — pricing, promotion, product choices — are working.
Market share	The business's sales as a % of total sales in that industry. If the whole ice cream market sells $10m worth of ice cream a year and your shop sells $1m of it, you have 10% market share. Growing market share = you're winning customers away from rivals, which strengthens your position and pricing power.
Profitability	and
Business growth	economies of scale
Shareholder satisfaction	share price dividends

Formula you must know — Percentage Change

% change = [ (New amount − Original amount) ÷ Original amount ] × 100

Measure

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Also in the full note

2. Reasons for Business Failure
What to Memorise
Concepts Checklist
Exam Tips
Non-Financial Measures of Success
Why New Businesses Are More at Risk
The Four Main Reasons Businesses Fail

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