3 Keys to a Successful Business
This week’s guest on the SUCCESS Line has been hustling since he was 15 years old and working as a cashier at Chick-Fil-A. Now in his 50s and running his own $2 million company, he is finally looking up from the grind and asking, “How do I know when I’ve done enough?”
This is such an important question that not enough entrepreneurs ask:
- How do I know when I’ve built my business to the right size?
- When will I have enough money?
- Enough time?
- Enough followers, trophies, and friends?
Put more simply, when can I stop?
If you’re expecting a clear finish line filled with applauding fans at the end of your career, you’re going to be sorely disappointed. There is no magic number or milestone to alert you that you’ve done enough. Instead, focus on building a healthy business today that can sustain itself tomorrow. And for that, there are three clear signs you are on the right track.
1. Healthy businesses should grow.
This may sound obvious, but a healthy business should grow. If you are doing things right—growing your reach, improving efficiency and streamlining systems—things should improve and build upon themselves. If you’re not growing, something is wrong.
With a healthy business, look for at least 20% growth in revenue, especially early on. This level of growth gets harder as your business expands, but accelerated revenue growth is one factor in determining the health of your business.
2. Healthy businesses should make money.
Businesses are valued based on estimated future cash flows. If you have a money machine that prints $1 per year, the acquirer will ask how many years that profit will be reliable. Whether you have any intention of selling, if a company does not make a profit, it is not self-sustaining.
Even if you receive funding or take on investors, you cannot treat those investments like an infinite pot of gold. If your business is losing money, the runway will only be so long before you run out of cash entirely. Improving your business’ profit margin should always be a focus if you want to build a long-lasting company.
You need to separate yourself from your business and treat it like a money-making machine. Check in: Are you making a consistent profit year after year? If you’re not, something needs to change. If you are, how can you make even more?
3. Healthy businesses should become less dependent on the founder over time.
The more a business depends on the founder, the more at risk the operation is for all parties involved: the customers, the employees, the founder and the potential acquirer. If a business depends on just one person, and something happens to that person, then the customers lose their ability to be served, the employees lose their jobs and the acquirers lose the possibility of buying the business.
Dependence on the founder is the linchpin of liability for every company. And I get it: it’s not easy to remove yourself from a business you built from scratch. However, if you want a self-sustaining business, you must work toward its independence, and you need to start today.
A business able to operate without its founder is not only more attractive to potential buyers, but it also gives the founder more freedom. If your business can operate without you, then you own the business instead of the business owning you.
Over time, your goal should be to build something that becomes even bigger than you, the founder. Build a self-sustaining business that lives longer than you do and gives life to future generations. That is an amazing impact worth hustling for.
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