Before you start a company, there are many crucial steps to take. One of the most important is to develop a definition of success that you can measure your company against, because if you haven’t defined success for yourself, you’ll have no way of gauging whether you’ve achieved it.

What defines a ‘successful’ company?

Defining what constitutes a successful lifestyle or build up company is relatively easy.

For your company to be successful as a lifestyle company, it has to support the initial goals of:

• Enabling you to operate in an industry that you enjoy being a part of.
• Providing you the opportunity to enjoy life with flexibility and freedom while operating this business.

For your company to be successful as a build-up company, it has to:

• Increase significantly in size in a timely manner.
• Generate enough value as it grows so there will be a way to exit the business at some point.

There is a general understanding of what a successful company needs to accomplish depending on the initial goal. With a lifestyle business, the criteria of success is clearer since there are no numbers and time tables to follow for determining size or when to exit. There is not even a requirement for having any employees. Yet these points are not clear in the case of the build-up company.

Let’s take the concept of size, for example.

Is the size of the company based on how much revenue it generates or on the number of employees? And what is a good rate of growth?

Let’s have a look at some statistics that may help us define these terms:

• Only three percent of US businesses have 500 employees or more, according to the Small Business & Entrepreneurship Council. More than 60 percent of businesses have two or fewer employees.
• As of 2012, according to the US Census Bureau, more than 60 percent of all businesses have less than $400,000 annual sales and more than 90 percent of them have less than $800,000.
• Only the largest 0.3 percent of companies in the US have more than a billion dollars in sales and more than 3,000 employees on average. The second tier of companies in terms of revenue make up 1.5 percent of all companies in the US with an average of 200 employees and slightly less than $50 million in revenue. And we don’t know how many of those companies are profitable or going to be around in three years.

So are those the ‘successful’ companies?

For size, maybe it is the number of customers that use the product or services of that company.

What about profit? According to a March 2015 publication from the Bureau of Economic Analysis, more than 25 percent of all profits made by US corporations are made by Financial Corporations whereas less than 10 percent are made in either the retail or wholesale trade, and less than three percent are made by Food & Beverage companies. Does that mean you have a better chance to create a successful company in the financial industry?

How important is the worth of the company and how should that worth be measured? By market cap, balance sheet, net worth, or some other form?

What about the positive impact on the community? How much value do employees having jobs, vendors sustaining their businesses and those businesses in turn sustaining their neighborhoods and cities provide? Is that a consideration at all for defining success?

This successful company thing is getting awfully complicated. How about we settle on this: If you are trying to build a lifestyle business and you are able to do what you love while making a positive difference in the world, and you are able to make a decent living from it, that should be considered successful.

For a build-up company, if you are able to develop a financially healthy company that is constantly growing in revenue while filling a need or taking advantage of an opportunity in the market, that should be considered success.

Besides these definitions, I need to add a few more criteria in order to be considered successful:

• Your employees should be happy to be a part of your company
• Your customers should be happy with your product or service
• Your investors and community should be happy to be associated with you

Your new company does not have to be the next Google or Tesla to be a success story. You do not even have to hit a seven digit revenue number, or employ even one person. All you need is to build something that will survive and grow and that you can be proud of. There are thousands of successful businesses all around us. Some of them we know by name, some of them we will never hear about and starting one is more achievable than you probably realize.

The post Defining Success Is a Crucial Step for Entrepreneurs appeared first on Cross Ocean Ventures.

These elements are:

• Founder(s)
• Idea
• Money
• Team/Employees
• Mission
• Culture
• Process

Founder(s)

These are the makers, the creators, the ones that see an opportunity and take action to make it happen. They are the ones that put their hands up because they think they can or they know they have to, the ones that do not give up on their dreams and put things into motion. Let’s be clear about something, though: they might not be the ones that see an idea through to the end. Sometimes, the best thing they can do is step aside when the company needs different leadership. And, unfortunately (for them), sometimes founders are even ousted from their own companies by directors and shareholders.

Idea

This is the reason the company exists. It is the light bulb that brightens the founder’s mind and puts them into motion. Without the idea, the company simply does not exist. That’s not to say the idea can’t or won’t change and evolve before it comes to fruition. Also, keep in mind that even an amazing idea doesn’t guarantee success. A lot of hard work goes into that idea before it becomes a success. Microsoft, Apple, Google, Ford, all of these now-iconic brands were just an idea at one time.

Money

Money is not just currency when you’re talking about starting a business. It represents every single resource you need to bring your company to life. From the vision in the founder’s head to a physical location filled with a team of people making that vision a reality, money is the resource that makes it all happen. It can be the number in a checking account, a limit on a line of credit or a favor from the founder’s web developer friend to work for free for a few hours (to save money). No matter how you look at it, money is the ‘resource’ in a founder’s resourcefulness. You don’t have money, you don’t have a business. Period.

Team / Employees

If the founder is the creator, the team and the employees are the disciples. They are the ones who make things happen.

The founder is usually just one person (or a small group of people). Their ability to change the world around them or at large by themselves is limited. Their main ability will be to influence others that can make those changes. The team they have working for them are who they influence directly and, in turn, who make the changes in the world around them.

Mission

The mission is the goal, the ultimate destination where the leader wants to take his/her following. It is the change in the world the idea is meant to bring about and what gets your team excited to be working for your company. If the idea is the destination, the mission is the desire to go that destination.

The mission is the declaration of what is important and what will stay important, as long as the desire to get to that destination does not change for the organization. It is what helps the team and the founder prioritize as they face fork-in-the-road decisions.

Culture

Culture is what the founder and the team make the company. It is the beliefs and behavior and the unwritten rule book of the company. It is the culture that determines how business transactions are made, how priorities are assessed, and how interactions are handled.

The team and the leaders make the culture together but they don’t control it. Often it is the other way around. It is the culture that controls (or at least strongly influences) the company. And that is exactly why it is the first thing true leaders look at when they want to change the company. It is unwritten, sometimes even unspoken, but it is always present in every corner of the business.

Process

Business process can be formal or informal, but it has to be there for things to get done in any organization.

Process is often what defines the maturity of an organization from infancy to adulthood. As time passes, experiences accumulate and the team develops a set of defined activities and tasks that exist to accomplish organizational goals.

Even though there is often resistance to change for processes, they still change much more frequently than the culture, the mission or the idea. Processes are the first things to be affected by new technology and the last things businesses tend to change when they are trying to become more successful.

There is another element that I didn’t put in the official list because it’s sort of controversial, but I think every successful company has experienced it to some degree: luck (or, if you prefer a fancier sounding word, you can go with serendipity). With so much competition, being in the right place at the right time or meeting the exact right person can give a company a much needed edge.

With the right elements in place (and a little bit of luck) any business has the potential to be a success.

[Photo credits in order: Serge Saint, Anna Hirsch & Richard foster/Flickr]

The post 7 Elements All Successful Businesses Need appeared first on Cross Ocean Ventures.