How do you know if a small business is successful?

By 5th January 2017Advice/Tips, Marketing, Opinion

How do you define the sweet smell of success? In a capitalist economy, we can throw around suggestions around reputation, how delighted clients are, how good the people are, the systems, potential to grow and other things I haven’t time or the imagination to list right now. Though cutting the crap for a moment; the measure that most often springs to mind is money! Yes, the financial performance of a business is the one that shareholders, the taxman, economists and, depending on the scale of the business, the media tend to focus on. Turnover is vanity, Profit is sanity, Cash is King! Right?

Well, I think so anyway. AND it’s not the only thing I think either.

Like you, I imagine, I have a lot of ideas. Some of them original, others are things we read or heard years ago, that somehow gained prominence at the forefront of our minds when presented with a new piece of information. Or more poetically put; a flash of inspiration! Recently I was waxing lyrical over some of the key points from the acclaimed Good to Great from Jim Collins. One of my favourite sections describes the Hedgehog Concept. I was applying this, as I often do, to some friends who were telling me that they weren’t happy with their jobs and how they were questioning their future. With a little adaptation you can apply the hedgehog concept to your career path to come up with something like this:

This shows how the sweet spot, or the ‘win’, for each of us is to find something that you are good at AND that you enjoy or are passionate about AND that you can be paid well (enough) to do. As I bang on about this, people usually respond with genuine or well-feigned interest and give it some thought. Whether I have inspired them to turn their lives around for the better and are forever indebted to me I really can’t say, but at the very least I find it useful to help achieve greater focus and perspective.

So anyway, I like it. AND it’s not the only thing I think either.

I can’t say with any certainty that this is an emerging trend or if to has always been this way, however a lot of people I talk to go through life doing whatever they do before having one of those moments. You know the ones; those moments where you question the meaning of your existence; whether when considering the statistical improbability of your existence (somewhere in the region of one in 14 trillion) you are wasting much of your life in a purposeless job through which you are cog in the machine that in one way or another just makes rich people richer and doesn’t contribute to the positive good of the planet?!

With this in mind; to truly hit the sweet spot in how you make a living you would need a Venn diagram that marks out the intersection between something that you are good at AND that you enjoy or are passionate about AND that you can be paid enough money to do AND that the world really needs.

Some people in Okinawa, Japan have an ethos they call ikigai meaning “the reason you get up for in the morning”. Recently this has been linked to evidence that this sense of purpose significantly increases your life expectancy.

 

I really like it. AND it’s not the only thing I think either.

I think it can be easily applied to business too. Whilst you might prefer to call it ikigai, or the reason you get up in the morning, I’m going to refer to henceforth as purpose.

So, if for an individual finding your purpose makes you happier, more successful and can even mean you live longer, these are characteristics that a business would like to have too right?
In this world where success is dominated by financial performance as a by-product of everything else that is important in a business what should we be measuring? Here is what I think:

 

  1. Are we good at what we do?
  2. Are we passionate about it?
  3. Are we making enough money?
  4. Do we help make the world a better place?

 

It works at any scale. Big businesses can be great; they create jobs upon which prosperous economies are build, whilst celebrated entrepreneurs who’ve built up something huge from virtually nothing are in the media spotlight and invited to give speeches that will inspire others. But what of those working in small businesses; can they be considered successful too?

I run a small business, in fact the government would call us a micro business. There are 3 of us working full-time and one part-time, we turnover around £250,000 and make a net profit at between 20% and 30%. In a world where financial performance is often what we look at, where high-growth entrepreneurs are rock stars and big is beautiful I can really see why some people would be very doubtful if I claimed we were successful. However, I suggest that like many other small, or very small businesses, we are successful in our own way:

 

  1. We are good at what we do. We specialise in achieving social good through creative marketing. By focussing on that, we are knowledgeable, skilled and determined to get results on whatever challenge comes our way. We have a great track record, have won awards, saved lives and improve our skills and capability every day.

 

  1. We are passionate about what we do. We use our energy to meet challenges that help others address a range of tough social challenges, we are free to use our skills, we like our clients and they trust us to do things our way.

 

  1. We are making enough money. I am not a self-made millionaire, but we have enough resource to make choices as a business and individually rather than act out of necessity. We pay tax on our profits and invest in new ideas and skills.

 

  1. We make the world a better place. We have built up the confidence to change the lives of some amazing people, we have protected thousands of young people from those who mean them harm, we have improved emotional wellbeing and reduced suicide, helped families improve the quality of their lives and lots of other amazing things.

 

This is our purpose, our ikigai, our reason to get up in the morning.

Does our little business feel successful? Most of the time. Is it easy? Hell no! The mission is far from accomplished and there will no doubt be challenging times to come, but by sticking to our aligned purpose we have the strength to keep going and like many other businesses, charities, public bodies, and other things, we realise that success isn’t measured by how much money is left in the bank at the end of the year, but by how we feel about the work we are doing and the way we do it.

 

OK, self-justification section over! How can this be useful to others and how do you measure this? Each business will have its own methods that are most important to you, though here is how I suggest a small business could do it:

 

  1. Are we good at what we do?

Measures: Results for clients, customer satisfaction, customer retention, repeat business.

Ask: “What do people say about us?”

 

  1. Are we passionate about it?

Measures: Self and/or employee satisfaction, asking ourselves; did we spend the right amount of time doing what we love this week/month/quarter?

Ask: “Are we excited about the next challenge?”

 

  1. Are we making enough money?

Measures: Profit targets, cash in bank, balance sheet, liquidity.

Ask: “Do our wages give us the life choices we want?”

 

  1. Do we make the world a better place?

Measures: Anecdotal evidence of who we’ve helped, the legacy we leave on the world, recognition and heartfelt pats on the back.

Ask: “Do we feel proud of what we are doing?”

 

Oh, and I’ll throw in a subjective measure for everyone to measure their own way regardless of role:

Is this making me happy?

Ask: “Am I happy with the hours I work? Do I have time for other things important to me? Do I feel like I can grow in my role? Am I making someone proud?”

 

Businesses are made up of people. They might have systems, but they aren’t a machine. Yes, cash is king AND life is precious. When you know how to find your purpose, try to spend at least some of your time there, and if you still can’t find it, don’t worry, life isn’t a race; you will get there. But for now, go forth and be successful!

 John Gilbert
Managing Director

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