Now that I’ve been responsible for a business for 25 years, I’ve grown to respect that, while many things change, some basic rules and principles always apply. These thoughts are shaped by the stories we don’t see in the media or, in some cases, by the stories I’ve seen, but also have added dimensions behind the scenes. I don’t claim that these perspectives are scientifically correct.
Entrepreneurial businesses manifest their founders’ character. The question is whether they can transition to a sustainable business when the founders leave.
Lots of architectural, engineering and construction businesses get their start with ambitious, creative, and sometimes very lucky initiatives by the founder or founding-partners. The challenge is whether the owner/founders can develop enough success to survive initially and then, as time progresses, to build enough sustainable depth into the business that it can continue after they leave.
Integrity is important but it needs to be defined (because businesses that we may find to be morally repugnant seem to survive, quite well.)
I’d like to say that being good is a prerequisite for business success. However, we would have trouble then explaining how organized crime continues through the decades. Nevertheless, I sense businesses which survive and evolve still capture and develop some essential values and principles. We need to be consistent. After all, payday loan joints are the modern-day counterpart to the loan shark. Yuck — but obviously these are viable businesses.
Technological changes can create and define the “luck” that allows a new business to thrive, or causes an old one to die.
In 25 years, I’ve certainly seen some rising stars and massive flame-outs. Old but true businesses continue, perhaps under new names. (Teamsters became truck drivers.) The common denominator among the surviving businesses is their ability to meet the underlying market needs and/or transition in a timely manner to the new market conditions. Most camera shops are failing. A few have become successful digital camera retailers.
Things move to entropy. Arbitrage and trading techniques (unless you are in a formalized arbitrage and trading business) can buy you some time and allow you windfall profits briefly, but are rarely sustainable.
If you sense a market inefficiency, and seek to bridge the gap with the “buy low, sell high” approach, you can make some money, often rather quickly. However, it doesn’t take too long usually for the market to catch up and for balance to be restored. Similarily, if you develop a real competitive advantage, you can expect others will copy you and you will soon lose your edge, unless you can innovate even more — or hide within a rather narrow or limited niche.
Branding is important. Sometimes quietly copying even buying out your new-fashioned competitor makes sense, even as you continue your current business.
I’ve seen lots of surprising things here. “Fighting brands,” retailers selling the same product in different shops next door to each other, but owned by the same company, supposed discount services owned by the same company that is known for “gouging” . . . on and on. Sometimes I wonder about the integrity of these arrangements, but as noted above, integrity is a concept that needs to be defined.
Most businesses fail within a few years of their start. A few explode into great successes, then crash. Some become multi-generational family success stories. Others are born and die with their founder. A few (hopefully the one I started) will transition into sustainable employee-led enterprises, that survive the natural technological, business-practice and marketing entropy. The latter is my choice, as it reflects my values. There are no guarantees.