Growing a successful business is not easy…but if it’s what you really want and your business aligns with your personal goals, it may feel easy, meaning that it may not feel like work. You just may feel passionate and driven. If it does feel like work, you may need to re-assess — yourself, your passions, your business, your priorities. The best way to grow a successful business depends on who owns the business.
No “one size fits all” applies to every owner or investor or every business. “Success” depends on what you define as success, not someone else. As a result, the way you grow a successful business depends on your short-term, medium-term and long-term goals are for yourself, your investors and your family. Your path to growing a successful business also depends on the type of business you have and your goals for the business.
That said, a few behaviors will drive you. You need to know your company’s cash position in advance. Always. I can’t stress this enough. I saw a $100 million revenue company rapidly growing businesses nearly shut down when the market shifted and sales slowed. The cash from new customer deposits had been covering the up to 180 days of outstanding accounts receivable from other customers!! When new deposits slowed, so did the cash!
If you need $150,000 in cash to pay employees and vendors but have no funds, your company could go out of business in weeks. This could happen despite your company’s income statement showing a decent profit. By always staying abreast of your business’ cash needs well in advance, you allow yourself time to raise funds from receivable financing, supplier credit lines, lines of credit, banks loans, investors, etc.
If you are the 100% owner, you need to know what you want out of your business. If not, then you and your partners or investors must agree on what you all want out of the business, separately and collectively. To do that, you must know what you want personally. Do you want a net worth of $50 million or more which would enable you to buy nice toys, travel the world, become an art collector and/or a philanthropist? If so, you need to scale one or more businesses quickly, sell out to a large corporation or private equity firm or go public via an IPO. If the $50 million net worth is your goal, then you would not consider your business successful if no one wanted to buy your business and your firm only generated $125,000 in net income for you to distribute to yourself each year.
On the other hand, do you want a business that provides you with flexibility, freedom, plenty of family time along with low stress and relatively steady income? If so, your successful business will look radically different than the one described in the above paragraph. Your successful business will likely eventually require 10-30 hours of your time and commitment each week. You can grow this business quickly in order to hire external managers. Alternatively you can structure your business so that you do not need to work continuously between 8am – 6 pm.
Remember, everyone’s idea of success differs. What I define as success for me, is not success to you, and vice versa. However, I do believe in the need to build a salable business, even if you choose not to sell. To do this you must operationalize your activities — meaning that you must transfer all your regular activities to software, machinery, employees or independent contractors. The more you try to do yourself, the more you significantly limit your business. In the limited scenario, you may wind up with a great job working for yourself but you’ll never have a truly successful standalone “business!”