Ask a business owner if their business is profitable and they’ll have an answer ready to go.
Ask a business owner if their business is sustainable, however, and they’ll look at you like you just asked them to explain the Theory of Relativity.
Few owners take the time to think about sustainability. They figure that once it comes time for a business to sustain itself, they’ll be long gone. But whether or not you actually plan on transferring your business in the immediate future, building on a foundation of sustainability should be your major priority. A sustainable business doesn’t ebb and flow with the markets, and it doesn’t cause financial stress for those at the top.
Once you review the five time-tested principles of business sustainability, you’ll see why.
Principle #1: Specific Planning and Objectives
A business is not on the road to sustainability until it has an accurate map. That begins with specific planning and objectives.
First, you’ll want to review financial goals for your business. How do you evaluate sustainability? Is it revenue? Net profits? Profits per employee? Don’t worry so much about which variable is right. What’s important here is that you set a specific standard for your sustainability.
Next, you’ll want to establish a timeframe. Dreams become goals when you give them a deadline. When will you meet your financial goals, and what are your plans for achieving them by then?
Principle #2: A Successful, Sustaining Team and the Ability to Trust Them
Let’s say you don’t plan on selling your business. What if you had an unexpected injury that leaves you bed-ridden for six weeks? Does your business have the leadership team in place to take over for you during your downtime?
Building a successful sustaining team means involving your leadership in major decisions. Give them the opportunity to provide feedback. Train them to understand your decision-making process. And most of all: give them more and more trust as they grow into their leadership roles.
Principle #3: Accountability and Progress
After you’ve set actionable, specific goals, you need to continually review your progress toward achieving them. This keeps you accountable to your plans and provides the real-time feedback you need to “adjust course” as you head toward greater sustainability.
You can combine this with the previous principle by training your leadership team to regularly review your progress. Teach them which financial variables deserve their focus. Eventually they’ll keep your business accountable without your efforts.
Principle #4: Transferability
Can you sell your business as-is? Is your business as valuable as it can be? If you were to die unexpectedly, would it transfer seamlessly to the next leader?
It doesn’t matter if you want to sell your business or not. If you answered “no” to the questions above, your business is not as strong and flexible as it needs to be. Your business is truly healthy when you can transfer it easily—whether or not you choose to.
Principle #5: Building Your Next Adventure
If you do have the goal of leaving your business within the next five years, remember that “retirement” is not a complete goal—at least not all by itself. As part of our emphasis on activement, we at vNacelle recommend that you have a next adventure planned for yourself. It can be a trip, a project, a relocation—anything that gets your juices flowing. The idea is not to look forward to retirement, but toward a new adventure that draws you forward and excites you.
These five principles are just a taste of what you’ll experience when you focus your efforts on business sustainability. Check out vNacelle.com to learn more about what we do!