Zollverein - gradually excluded Austria from German economic affairs as she couldn't afford to join with the free trade principles - that was where most of her income came from. When Austria was defeated in the 1866 War, they were forced to accept the treaty of total exclusion from German affairs.
Humiliation at Olmutz 1850- when the Prussians were forced to back off by an Austrian army, going in to sort out a revolt in one of the Southern States, Hesse. This also accompanied the acceptance to dissolve the Erfurt Union - Prussias attempt to control German affairs and accept the Austrian-controlled Diet at Frankfurt - for now. This prompted a rethink by von Roon and Bismarck and this is when they started reforming and reorganisation of the army, by dismissing militia and recruiting new soldiers tobe fully trained. Weaponry and technique was upgraded making it a modern effective fighting force.
Schleswig-Holstein Crisis - allowed Prussia to first exercise their new army in 1864 against the Danes - beating them twice in battle. Schleswig and Holstein were then given to Austria and Prussia respectively, but Bismarck intended to annex the two all along, and he did this in the aftermath of the Seven Weeks War 1866.
Decline of Austria - After the Crimean War, Austria was diplomatically isolated, having annoyed the West for hesitating, and lost all relations with Russia after having joined the West eventually. Bismarck could also seize on this, using Austria's unstable empire and weakening influence to politically outmanoeuvre her in Germany. 1867, Austria was forced to sign the Ausgleich, the compromise with Hungary to rule jointly.
Franco-Prussian War 1871 - Bismarck was able to finally unite the 4 Southern German states into Germany, with his convincing them to join. He had to grant various concessions however, such as specific tax freedoms, to get their full support. He also annexed Alsace-Lorraine as a way of making sure Germany had the advantage in he next war - because, he said, France would hate Germany no matter what treaty Germany imposed on them.