What makes a company financially successful

Companies that succeed embrace change and respond to challenges presented by the market, the competition or business conditions in general. Effective technology is probably the most important enabler for change that a company can introduce. A relatively modern phenomenon that has dramatically changed the daily lives of individuals and businesses throughout the world, running the gamut from personal computers and computer software to production robotics to communications technology.

Leveraging information technology for business success is key to survival in the modern business world. Lack of structure and the absence of systems all but ensure inconsistency in how work is done, conflicting agendas, dissension and confusion.

Structure supports success. A frequently credited attribute of success is the streamlining of business processes. Business processes are how things are done within a business. Every company has some processes; some are clearly defined, others are implicit. The intention here is to increase productivity and reduce costs while generating the same or better outcomes.

Successful businesses understand the need to continuously improve their business processes: to become more efficient and productive, and to respond to market changes faster while providing better service to customers.

A good leader lives the company culture, complies with standards and rules, and is an example for the employees. Ultimately, good leaders make employees feel valued. In fact, a bad leader can make good financial or marketing decisions, yet lead a team of miserable employees. From failing to empathize with employee struggles to communicating in an unclear or frustrating manner, bad leaders inspire employees to quit or switch departments left and right.

Good managers are part of how a successful company keeps good employees on payroll. A mission with great core values that employees can believe in is another way. The most successful companies recognize the good talent they have, and work to keep it.

That means more than a competitive salary and a few benefits. Employees need to fit in with the company culture and feel valued for their contributions. Offering additional training opportunities and extra perks like telecommute days are popular ways companies keep their best talent.

Benefits packages with flexible sick and vacation day options are another. Finally, employees need to know that development opportunities, including moving up the ladder or moving laterally within the company, are possible. One key component in what makes a successful business is the financial records. Businesses need a very clear idea of how much they make and spend.

Keeping track of finances helps businesses spot good patterns and possible financial dangers. When businesses know their finances, they can choose to make investments, pursue innovations, or pay for new equipment or new suppliers. Outsourcing some of the financial burden is a smart move for smaller companies.

Successful corporations can, of course, afford in-house accountants and analysts. Plus, successful CEOs know not to get too bogged down in the nitty-gritty work, because it actually gets in the way of managing and leading effectively. When you create a quality product, people are going to copy you. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.

By Marquis Codjia. Sales Revenue Sales revenue drives a company's profitability engine to commercial success. Merchandise Expense A company with a low merchandise expense -- also known as cost of sale or cost of goods sold -- shows financiers it can adeptly manage its gross margin and increase profitability indicators over time.

Operating Charges Operating charges -- or operating expenses, as finance people call them -- range from office supplies and litigation to regulatory fines, rent, depreciation, shipping and utilities. Net Income Net income ultimately is the number that matters, especially when it comes to comparing a company's performance data with rivals' information. Related Articles. That affects profitability in the different niches. The University of Nebraska says that if you make a profit with one factory, adding a second factory can potentially double your profitability, as long as your output doesn't exceed demand.

If you can increase your manufacturing output or increase the number of sales without increasing expenses, you become more profitable. This may require upgrading your equipment for greater efficiency, setting higher sales commissions or offering bonuses.

Direct expenses. These are the costs that vary with productivity: The more inventory your factory turns out, the more raw materials you need to buy, for example, and the more staff you have to pay. These are the expenses that stay constant regardless of output. Your administrative expenses stay the same, for instance, unless you hire more managers.

The state of the economy. If a depression or a wave of high unemployment hits, businesses feel the pain. It's particularly true if you're selling something people can afford to live without.