How to Build an Enduring Business During a Time When Businesses Don't Endure The pace of technological and market change forces companies to continually reinvent themselves to remain in business.
By Firas Kittaneh Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Writer Bourree Lam posed an interesting question: "Will firms live as long as they once did?" to which he answered, "It seems not: Richard Foster, a lecturer at the Yale School of Management, has found that the average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today. Foster also found that on average an S&P company is now being replaced every two weeks, and estimates that 75 percent of the S&P 500 firms will be replaced by new firms by 2027."
Companies evolve, not disappear into the ether. Whether through an acquisition, merger or rebrand, some of the most successful corporations voluntarily abandon their original business model to free up resources for innovation and continued success. So, to build an enduring business, management teams need to do three things:
Let context drive innovation.
Build and retain a world-class team.
Stubbornly persevere despite all odds.
How context dictates innovation.
Entrepreneurs have a bad habit believing their ideas are going to be game-changers in their industry. While a fresh concept may seem interesting and innovative, business owners should ask themselves: Is it something customers actually want? Is it at all practical?
Unfortunately, many brilliant ideas fail because they are ahead of their time. Before the dotcom crash, Kozmo.com and Webvan quickly went belly up pioneering on-demand delivery, an industry in which Instacart and Uber now thrive. Sadly, these ideas were introduced before smartphones were invented and labor was expensive. Currently, Uber is valued at an excess of $50 billion and won't be going away anytime soon. It was hardly the first company to conceive the idea, but Uber found the right time to capitalize on existing infrastructures and inventory to grow its business. Although Uber is only six years old, it is undoubtedly a brand with significant staying power.
Related: Uber Speeds Past Facebook as Quickest to $50 Billion Value Level
Why company culture should be your first priority.
Plenty of small business owners can build million-dollar businesses all by themselves with technology on their side and a revolving door of contractors. But the success of these companies tends to be short-lived as competitors enter the market and provide customers with a better product at a better price.
For an organization to thrive going the distance, its leaders must prioritize worker happiness to build a company employees don't want to quit. Since experts estimate the cost of employee turnover is as high as $65,510, businesses simply can't afford to let key team members go.
To build an enduring company, Chris Helle of Hubspot insists the secret is: Fix culture first. Strong core values and high job satisfaction establish a foundation upon which businesses can grow consistently.
Related: Lower Employee Turnover and Improve the Bottom Line
What grit can do for struggling entrepreneurs.
In her 2013 TED talk, psychologist Angela Lee Duckworth suggested the key to success is grit. Companies are doomed to fail when their leaders lose hope and give up. While the road to success is littered with challenges, clever entrepreneurs remain composed and face every issue with a winning attitude. Lack of grit, Amy Rosen says, is "the entrepreneurship killer." Fortunately, grit is a learned skill.
According to Travis Bradberry, entrepreneurs who have the grit needed to succeed rarely dwell on failures and consider failing a necessary part of the learning process. They avoid negative emotions and maintain their resolve, despite hardships. And they set aside their egos when issues arrive, accepting responsibility for their actions but remain laser focused on driving results.
