Here’s a question every business owner considers at some point in their career: “How do I build a sustainable business?”
The answer isn’t simple or quick or easy, but Joe Worth, vice president of operations and partner at B2B CFO says, “the answer is the same for any small business, whether it’s looking to cash out in 50 months or 50 years.”
In a recent article for Entrepreneur, Worth lays out what he calls “a basic checklist” to build a sustainable business.
A Sustainable Business is Financially Strong
Having financial controls in place reduces the possibilities of theft or fraud and enables you to make effective decisions about the future. “Until you know where every penny’s going,” Worth says, “your business isn’t on sound footing.”
Reduce or Eliminate Distractions
Your job as CEO or business owner is to focus on the future—“building relationships, developing new products and services and overseeing other big-picture ideas.”
But you can’t attend to these vital functions if you’re distracted by cash flow issues or hiring and firing employees.
“Hire trustworthy and smart people to handle the details,” Worth says. “They’re worth it.”
Diversify
Whatever products or services you’re providing, keep thinking about ways to diversify your offerings. “Spreading sales over more customers, product lines, or markets … enhances opportunities for growth.”
Document Business Processes
Worth says, “I often tell owners if they want to be a bigger company eventually, act like one now.”
This means you have to maintain accurate and comprehensive documentation of your business processes.
Strive for Continuous Improvement
An inefficient business is almost guaranteed to fail sooner, rather than later. Improve efficiencies wherever possible, Worth says. “Every dollar of improvement here will result in more dollars of value, whether it’s four years from now or 40.”
Guard Your Intellectual Property
Think it’s too costly to hire an IP attorney? If so, your business could be at risk of losing valuable rights for trademarks, names, designs, technologies, etc.
Maintain Equipment and Upgrade Where Necessary
The technology used in your business must be maintained because, without it, what do you have?
As Worth notes, you should always have access to funds “that can be used to take advantage of technological improvements, expand operations and keep everything in running order.”
Be a Fair and Inclusive Employer
Obviously, a high-performing team is a must-have for the longevity of your business. Put HR policies in place that increase employee retention, rather than diminish it.
Don’t Compete on Price
Becoming known for undercutting the competition is a non-starter, Worth says. Not only does it destroy your profit margins, “you want customers to choose you for your superior products and services, not because you’re cheapest.”
Businesses that focus on the quick buck rarely last long.
Instead, a company whose owner charts growth and progress in years, not months, “is a much easier ship to steer.”
What are you doing to build a sustainable business?
[mc4wp_form]
