Is Your Business Built To Last?
Three qualities that successful businesses share
Every entrepreneur or business owner wants their company to withstand the test of time. But when you consider the fact that the average lifespan of companies listed on the S&P500 has decreased from 60 years in 1958 to 18 years today, you have wonder — what the hell is going on?
The internet is awash with statistics on business failure, with figures ranging anywhere between 30% and 60% being touted for the failure of a business within the first five years. You often hear the standard for having succeeded as a small-business owner is three years, as it is within these initial years that businesses most often fail. Is anybody truly surprised that companies aren’t lasting as long as they once were, now that three years is the benchmark for success?
When Jobs and Wozniak built the Apple I in Steve’s parent's garage in 1975, do you think they envisioned they would have “made it” in three years? No? Why not?
Because they wanted to change the world.
And while we won’t all go on to co-found trillion-dollar companies (yes, trillion), that doesn’t mean you shouldn’t pursue your dreams with the same level of passion that they did.
I don’t care what industry you’re in, nobody builds a company with a three-year plan. You want to build a company that will last, right? This is the part where you start nodding your head.
Here are three questions I want you to ask yourself right now, to give you some idea of whether your business has the potential to only last, but to outlast you.
Do you have a vision?
Every company needs a vision. It doesn’t have to be yours, (we aren’t all Elon Musk after all), but there’s nothing stopping you from sharing somebody else’s. The vision is the reason your company exists, it is an ideal which you hope to advance. It is a vision of a world which you aspire to live in.
Steve Job’s vision when he co-founded Apple was a world in which personal computers were available to all, where there were no barriers preventing an individual from learning how to use a computer.
Look what he did with that vision. He helped to create technology so profound and simple to use that even my Nan could still use it, and she’s been dead for three years. When Apple last reported sales figures for the iPhone in November 2018, they had sold 2.2 billion units, accounting for roughly half of all smartphones sold in the United States.
His vision shaped how we interact with technology today.
Your vision should be:
- Unattainable — your vision should be an ideal. It is a cause which you hope to advance through your company, and the products or services you provide.
- Values-based — your vision should incorporate your company values and beliefs. It should communicate to people what it is that you stand for, what you believe in, and why your company exists.
Your vision should not be:
- Financial— making money is an outcome, a consequence of trying to achieve your vision.
- Growth — that your company exists to achieve growth is akin to answering the question ‘Where are you going on vacation?’ by saying ‘DUH…Vacation!’ You must have a reason beyond 'growth’.
- Measurable — ‘We want to achieve $______ in revenue by _____.’ is a goal, not a vision. Goals are tangible, your vision is not.
“A vision is having a crystal-clear idea of where the finish line is, but having no idea how far away it is.” — Simon Sinek
The most successful companies aren’t worried about the quarterly results. They’re not concerned about the short-term, and they don’t obsess over every little thing their competition is doing. They concentrate their efforts on advancing their vision, something they know which will never be achieved, but the pursuit of which is the very reason that the company exists to begin with.
Do you have your priorities in the right place?
Who is your priority? Is it your shareholders? Your employees? Or your customers?
In his 1962 book, Capitalism and Freedom, the economist Milton Friedman wrote that:
“Corporations have no higher purpose than maximizing profits for their shareholders.”
He advocated that corporate executives are employees of the owners of the business and that their primary responsibility should be to “conduct the business in accordance with their desires.”
It was over the course of the following two decades that CEO’s such as Jack Welch and Al Dunlap popularized the use of mass layoffs in order to ‘balance the books,’ culling thousands of jobs from their respective companies as a way of maximising shareholder value. Nevermind the human beings we’ve just made unemployed, our share price just went through the roof and I’ve just had a huge raise!
Prioritising the interests of your shareholders is the equivalent of a coach prioritising the wants of the fans over the needs of the players. You might get some short-term wins, but it won’t create lasting success.
What about your customers and your employees?
Which came first, the chicken or the egg?
On one hand, your customers are your source of revenue. Without them, your business will run out of the necessary resources to continue. After all, they pay the bills.
But if your employees are unhappy, it resonates. If they don’t feel trusted and empowered to do their jobs, they won’t give you their all, and it is ultimately the customer and the company that suffers. But if you take care of your employees and create a culture where they feel valued, they will give you their blood, sweat, and tears in order to help you achieve your goals and advance your vision.
Many founders/CEOs make the mistake of thinking that they are responsible for delivering the results.
A CEO is responsible for the people who are responsible for delivering the results, for the people who deal with your customers or clients.
“Take care of your employees and they will take care of your business. It’s as simple as that.” — Richard Branson
Your company culture starts with you, and it is your decisions and your actions which will set the direction of the company culture.
Look after your employees, let them look after the results.
Would your business pass the ‘Bus’ test?
With the founder at the helm, a company’s vision and values are apparent with every decision, through the passion and personality that seeps into the company culture. Ask yourself:
What would happen to my company if I were hit by a bus tomorrow?
To clarify, I’m not talking about the company’s ability to operate. If you run a company that manufactures computer components, your business wouldn’t lose the ability to do so in your absence.
But would it lose its way?
When Steve Jobs left Apple in 1985, the company didn’t stop making computers. But it lost its vision and its purpose, making unsuccessful forays into products such as digital cameras and portable CD players while seeing a significant loss of market share to Microsoft. By the time Steve Jobs returned in 1997, the company was on the verge of bankruptcy, having alienated consumers with high-price points way above what their target audience could afford.
After Sam Walton died, Walmart made a steady decline from being a company that was loved by customers and employees alike, to one which received countless lawsuits for discrimination and unpaid wages.
The founder’s vision needs to be embedded in the company culture. Every decision, every action has to be made with that vision in mind, even after the founder departs. You need to be able to say with absolute certainty that your employees would carry on advancing your vision without you there to guide them.
Answering ‘yes’ to these three questions won’t guarantee your business success. But you will share some qualities with some of the most successful companies the world has seen over the last century.
You’ve not just built a company with the potential to last. You’ve built a company to outlast.
And isn’t that the sort of company that we’d all like to be a part of?
Jon Peters is a 28-year-old writer, father and lover of words. If you made it this far down the page, welcome! It’s great to have you here. If you found this article interesting and would like to read more of my ramblings, click here, here, or here, or click on any of the links below.