Everyone loves your new business and sales are going well, but have you really made it? How do you know if your business is truly successful? While success may be in the eye of the beholder, there’s only one real measure.
Startups often experience a moment of doubt in their first year of operation. It can begin with a nervous glance at revenue or market share—or perhaps the dwindling capital from investors. On the other hand, when these figures are up, the mood is correspondingly high.
Top picture: accounting/ Shutterstock
Revenue, share price, number of employees, percentage of annual revenue growth, size of warehouse, and number of products sold: these are all ways in which we evaluate businesses. It’s what gets hyped up in the media, it’s what is proudly touted on a business’ website.
All these numbers may lead you to believe there are different kinds of success, however there is only one true way to know if your business is a success: is it making a profit? I can beat around the bush, but unless your business is generating clear profits after paying for its expenses and providing nice dividends to its shareholders, then it is not really successful.
Without a bottom line in the black, you don’t have a business for very long. Flashy lifestyles and fancy launches don’t mean a thing if the money you have is borrowed. Many startups seem successful when they’re brimming with sales, but sales alone are unsustainable without profit. Meeting expenses is survival, earning beyond them is success.
It’s attractive to have a million-dollar company in a very short time but too often, entrepreneurs focus on generating top line revenue while behind the scenes they’re frantically raising more funds to cover their burn. Only if that million-dollar company has repaid the $5 million in startup capital to its investors could you call it successful.
Too many companies in the online space are CRAP: Cannot Realise Any Profit. They focus more on revenues and market share but don’t think about the big picture, which is the bottom line. These companies are generally financed by international backers that are happy to spend the investment funds of other international backers, and so it goes. They may be examples of successful pitches for capital or success in doing deals, but unless the company is profitable they are not successful businesses.
By this measure, CatchOfTheDay was successful early on. But although we see a positive bottom line as the one true measure of success, we also recognise that profit alone is not enough to keep a business successful.
The early days had us working 18-hour days, running full speed for pretty low salaries because we had no choice. If we had kept doing business like that—even if we were making a profit—I wouldn’t call it a ‘success’. For sustainable success we include the factors that contribute to ongoing profit in the measurement. Those things are the intangible elements such as work/life balance, employee satisfaction and a positive working environment.
It’s common in startups to run almost purely on the drive to succeed, but that level of sacrifice is not sustainable. Now we see, through the lens of ongoing success, that the energy we put in was worth it because we celebrate our profitability by being able to afford a better work/life balance, a holiday or two per year, great remuneration for staff, an enviable work environment—alongside nice dividends for our shareholders.
So while startup success can only really be measured in profitability, business success needs to be measured in other ways, and they can be as individual as each business. In addition to a healthy bottom line, what are your measures of success?
Hezi Leibovich is the co-founder of The Catch Group, Australia’s leading online shopping group, incorporating online retail sites CatchOfTheDay.com.au, Scoopon.com.au, Groceryrun.com.au, Vinomofo.com, Mumgo.com.au and Eatnow.com.au.
Pairing insight and a strategic eye, Hezi founded Catch Of The Day with brother Gabby and now provides the vision for The Catch Group to ensure the company remains relevant and sustainable into the long term. Hezi’s ability to identify expertise across all skills has seen him add equally insightful talent to a dynamic team, taking it from five to more than 400 staff in five years.
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