Enjoy this week’s guest post by Lynn Sperry on starting a business with a goal of durability and structuring a business that lasts!
When you’re starting a business, it can be surprisingly challenging to define success. Will your business be successful when it starts to turn a profit? When you’re able to pay back any money you owe from the startup process? Or perhaps when you pass some specific threshold regarding amount of revenue or number of employees?
There isn’t necessarily a correct way to look at this, and it’s natural for goals to vary from one business to the next. There is, however, another way to look at it, which is that really any new startup is aiming for durability. Whenever success comes, and however you may define the term, it can’t exist if the business isn’t structurally designed to last.
With this in mind, please read on for some of our ideas about how exactly you can set up a new business with an eye toward durability.
Embrace Purpose Over Profits
Advice of this nature can seem somewhat idealistic, but rest assured the point isn’t that your startup shouldn’t strive for profits or prioritize revenue. Rather, this is just a suggestion that a business in which the focus is more on making an impact and providing value will often be better suited for long-term success than one in which the owners are merely trying to do what they can to turn a profit.
This is an idea expressed clearly in Harvard Business Review’s article on lasting startups. In that piece, there was actually research cited indicating that among businesses that had endured for more than 50 years, commitment to value and purpose was prioritized over maximizing growth or profits. These were visionary companies, rather than strictly business ventures, and they were more successful for it.
Whether you’re aiming for a 50-year run or not, this is certainly something to keep in mind as you set up a startup for durability.
Structure the Business for Growth
The technical structure of a business — meaning whether it is set up as a corporation, an LLC, a partnership or sole proprietorship, etc. — is not often the primary focus of a startup founder in the early going. Particularly today, when so many startups begin with relative simplicity and a focus on online operations, structural designation can be an afterthought. This isn’t necessarily a problem, but deciding on a structure can help you to set up the parameters for the growth that is likely to occur with an enduring business.
A post on setting up an LLC here in California does a nice job of delving into how your choice of business legal entity can have a profound effect on your operations and future growth. After all, it dictates how your business will be organized and taxed, and how owners manage assets and are liable for any business damages. For example, though LLCs and corporations are both required to submit their by-laws and operating agreements, respectively, to the state, LLCs can be more flexible when it comes to ownership and organizational structure, which can be tweaked more easily as your business grows. Moreover, corporations are typically taxed at a flat rate on income, while LLC earnings are deferred to their owner’s income.
This may all seem like a lot to consider in the early going, but having the right structure in place will help you to grow more seamlessly, which makes the business more durable.
Adopt Versatile Practices
Today, it’s also important to consider versatility with regard to building for durability. In mid-2020, a SmallBizTrends report on a small business survey indicated that 57% of owners believe they’ll be sticking with remote work even when it’s no longer necessary (or mandated) to stay at home. The key finding is that small business owners are open to the idea of having to adapt. With California recently named as the state with the fastest spread of COVID-19, business adaptability is all the more crucial. It may be a while before a state- or society-wide return to normal is possible, and implementing practices that enable the business to withstand pressure and uncertainty is a must.
That willingness can only help your business to establish itself as a durable force. Both with regard to the public health emergency we’ve experienced in 2020 and other, smaller interruptions that can befall a business, versatility is an invaluable asset. A startup that aims to withstand difficult times will have a better chance of meeting that goal if it’s prepared to make use of technology, transition to remote work if needed, and perhaps even lean on an emergency fund. When starting a business the more prepared you can be, the better.
Prioritize Employee Experience
There may not be a factor more important in startup endurance than employee enthusiasm. All too often, this topic is framed instead as having to do with employee “satisfaction”, but the greater goal should go further. It should be about improving the employee experience, rather than simply making it adequate (as the word “satisfaction” sort of implies).
How you go about improving the employee experience depends a lot on the nature of your business. If you use a physical workspace, it will involve office comfort and availability of technology; if you’re entirely remote, it may mean incorporating flexible hours and facilitating digital socialization. You must also think about ways to support your workforce during crises such as this one, and Dr. Sally Chung’s article could be a useful resource on practical steps you can take, like improving workplace conditions for on-site employees, and providing additional leave for work-from-home parents. Whatever the case may be specifically though, it’s important to keep in mind that it’s your job to keep employees happy — not just satisfied.
The effect of success in this area is difficult to overstate. Happy employees will generally be more productive. In time, they’ll also help your startup to develop a positive reputation for workplace culture, which in turn can lead to more successful recruitment and stronger teams. And of course, all of this translates to long-term strength for your startup.
Together, these practices can all help to set a new company up to last. Other priorities can of course be arranged to maximize profits and generate early growth. But durability is often the more strategic primary focus, and these ideas can help you to keep it front and center.
The post Starting a Business with an Eye Toward Durability appeared first on Melissa Forziat Events and Marketing.