How to Define Success When Starting a Business

Starting a Business

Business success can take many different forms, but every entrepreneur should define what success is for them and their business. Running a new business requires too much labor and capital to not pursue success, and defining success is the first step toward pursuing and achieving it. How could you arrive at a destination if you’re not sure what the destination is?

What constitutes success for your business depends on your goals and business. It’s only something that you can define. These questions can help you clearly define what success will be, though.

When starting a new business, defining success involves more than just financial goals; it also includes identifying and leveraging digital solutions to streamline operations, connect with customers, and stay competitive in the digital marketplace. By embracing technology and exploring digital solutions, such as implementing user-friendly software to make a paystub (click here for more information), new businesses can position themselves for long-term success and growth, ensure efficient payroll management while providing employees with easy access to their payment documentation.

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Is the business a labor of love?

All entrepreneurs must be passionate about their business, and they clearly have to believe in it. Certain types of businesses are referred to as a “labor of love,” which means they go beyond the requisite passion.

Business owners with labors of love do the work simply because they love it. They’d likely continue the work even if not being paid or making money. Woodworkers, writers, artists, tour guides, fitness instructors, and many other professionals have these types of businesses. They likely could make more money doing something else, but they’ve instead found a way to get paid doing what they love.

Labors of love can pay good wages, and decent small business profits. They have a cap on how much money they’ll generate, however, and thus tend to remain small businesses with only one or a few owners. These businesses don’t typically make multimillionaires.

Determine whether your business is a labor of love. If it is, recognize the value that doing what you love has. Also recognize that there likely will be limits to revenues, profits and growth. If your business isn’t a labor of love, make sure there’s enough profit and growth potential for you to justify spending time on the business.

What is your exit strategy?

The best entrepreneurs start businesses with an end in mind. The end is often referred to as an “exit strategy,” but you don’t have to exit the business. There are several ways your business ownership could legitimately draw to a close:
  • Close: Simply close the business when you retire/cease working. Recognize that you earned a good living and enjoyed being a business owner. You won’t receive any equity from your career in this case.
  • Sell: Sell your business when you retire/cease working. Recognize that you earned a good living and enjoyed being a business owner. You’ve also built up a successful business, and can sell it to capitalize on your financial and sweat equity. You might sell a client list, brand name, copyright, patent, facility, or any other property. Selling can take a long time.
  • Transition: Pass your business onto a family member, usually a child. Recognize that you earned a good living, enjoyed being a business owner, and have something of value that can be given to your child. Your child may or may not pay you for the business. An attorney should be involved with the succession plan to ensure a smooth business and familial transition.
  • Buyout: Intentionally seek a buyout from a competitor, investor or larger company. Build the business rapidly, so you might sell within a few years. Buyouts tend to occur with businesses that have substantial growth potential and a strong growth track record.

How much income does the business need to provide?

All businesses hopefully provide salary and profit, but how much you have to earn from your business depends on your personal situation.

Do you eventually need a full-time income from your business? If so, how quickly and how many people must the business support? Can you instead run the business for only a part-time or supplemental income?

Don’t just think about your expenses now when answering these questions, but make sure the business is financially viable for the future too. You might have to support a family, a larger family, or a more expensive lifestyle in the coming years. No entrepreneur wants to stop running their business to meet financial needs that could’ve been predicted.

How many people will be involved in your business?

The number of people involved with your business impacts its size and potential growth, but also how complex the business is to run. You’ll be in charge of personnel if others are involved with your business.

Do you want to run the business as a one-person show, accepting the corresponding limitations for the simplicity of not having employees? Do you want only a few employees, or would you eventually be willing to manage many employees? Will you bring investors on board at all? They can provide valuable financial investment and guidance, but bring their own interests too.

What values drive your decisions and actions?

On a personal level, what values drive your decision-making and actions? These same values should probably guide your business decisions and actions, including the reason for starting your business in the first place.

How do you define personal success in life?

Also on a personal level, how do you define success in general? Personal success can take many forms. Do you prioritize financial security, happiness, your legacy (familial or otherwise), or something else? Do you have a particular goal or personal mission statement?

How important is bettering the world for you?

Whatever you prioritize, consider how your business efforts will aid your personal success.

Where are you willing to compromise?

Compromises are made in virtually all areas of life, and you’ll likely have to compromise sometimes when running your business. When you can’t get everything perfectly, what are you willing to compromise?

Will you sacrifice personal enjoyment for profit, or vice-versa? Are there particular aspects of your life (e.g. activities, schedule flexibility, location) that you want to maintain? Is faster growth or fewer/no investors preferable?

Think through these sorts of questions before starting your business, so you know how to handle situations that might require compromise. You don’t want to be unsure when you’re in the midst of a difficult decision.

What is your business strategy?

After you’ve thought through all of the major decisions, how will you incorporate the answers into your business plan? What does your business strategy look like, in light of your needs and aspirations?

As you’re working through the implications of your answers, you may have to make adjustments to your business strategy. Make sure your strategy is practical and meets your needs, so that you can succeed as an entrepreneur with a new business. To have a detailed outline of your company's future, create a strategy doc that will also set values for your business and support your business plan.

This is the ABC of starting a business, and you need to consider it when crafting your business plan, coming up with a business name, and considering your branding strategy. All these elements should work cohesively together to get your business on the path to success.

Define Your Success for Your Business

Success is a relative term, taking many different forms for many different businesses. Every entrepreneur should be pursuing their own form of success, though. Use these questions to help you define what that success will look like for your business as you establish and grow it.

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