Are your business and life successful in the four ways that matter most?
After working with hundreds of entrepreneurs and deeply exploring their objectives, life goals and desires for their businesses and personal lives, I find they are ultimately driven by four measures.
Let me start by saying I won’t address their passion for the work they’re doing, the customers they’re serving or the employees they’re nurturing and growing. All three of these are absolute requirements of building success. The question small business owners, landscape contractors and entrepreneurs want to know is: “To what end?” How will my blood, sweat and tears help me be better off in the end?
Here are the four metrics our conversations invariably come back to:
1. Profit improvement
Profit improvement, the way I measure it, encompasses cash flow, dividends and owner’s income (because of how I treat depreciation and other factors). Profit is both a measure and outcome of success. It’s the return on investment into your business and your education, and it’s what pays for the investment in your current and new employees, buildings, technology, expansion, innovation and more. Profit also pays for diversification for owners who want to invest in property and other ventures. It’s a very important measurement of outcome, but it’s not the only metric. And, in fact, it’s a short-sighted metric if it’s allowed to stand alone.
2. Value of business
This is a longer-term and more profound indicator of success because to grow value, you have to grow profits as mentioned above. You also have to grow your people and your organization, and you have to do it strategically so your company can outlive you as the owner and survive the ups and downs of the economy.
Profit measures what you would pay for your business, but business value measures what someone else would pay for your business. When you want to transition, the latter is more important.
3. Stress-free discretionary time
Money used to be the main measure of success, and in this day and age time has taken its place. Your ability to control and enjoy your time is now the ultimate metric. To gain free time as an owner you have to be successfully profitable (No. 1 above) and you have to build a business that has inherent value (No. 2 above), but you have to do more than that. You must make strategic decisions about your role in the business and who you hire and where you spend your time. It’s more than time management, it’s time strategy.
4. Legacy: emotional value of family time, community contributions and life experiences
In the end, at your eulogy, on your death bed, in your old age, and even during your moments of reflection this summer while spending time with your family, you may realize your legacy is the most important value you’ve created. It’s emotional, community-oriented and resides in family experiences. It’s how you affect those around you. It’s the bigger reason you’re doing what you’re doing. It’s your main reason for working so hard, facing your inner obstacles and growing yourself and those around you. You may have realized the pride associated with building a successful business. The trick is not to put your family last to achieve this reality.
You can achieve all four of these definitions of success, but only with strategy and forethought. The first three will help you achieve the fourth if you start with the end in mind and work backward.
Are you making the progress you want to on all four of these success indicators?
Photo: publicdomainpictures.net/bobbymikul
