Over 20 years ago, I graduated from college (Miami University in Oxford, Ohio). I think that I was well educated and well prepared for the working world. During senior year I took a class about buying, selling and starting your own business. The class was not taught by a professor. It was taught by a retired businessman who started and sold many business in his career. Some of these ventures were successful and some were failures. We studied all of his business ventures and many other case studies (no textbooks were used). He retired a very wealthy man and decided to share his knowledge at Miami. Unfortunately, I do not remember the instructor’s name.
Obviously, I have forgot many things from my college years 20 years ago, but I do remember the 3 most important entrepreneurial business factors that I learned in that class:.
1. Cash is King
A business cannot survive without cash. Cash flow is lifeblood of any business and is of vital importance to the health of a business. It is often said that “revenue is vanity, profit is sanity, but cash is king”. It may look better to have a large top line (sales) but the most important focus for a business should be cash flow. Businesses can survive in the short-term even with poor margins by delaying to pay creditors, borrowing money, etc. but no business can survive long-term without sustainable cash flow to meet its operating needs.
2. Do Not Fall in Love with Your Business
Whether your business is successful or not, always have an exit plan. Your exit plan should be developed at the same time that your develop your initial business plan. Many business owners fall in love with their business and don’t want to think about selling or closing the doors on what they have built until it’s too late and after great opportunities are missed.
3. Be the 1st to be 2nd
If you are starting a new business, it is much easier to copy an existing idea than to create a new idea. It sounds like cheating but copying successful ideas is the reality of doing business. Let someone else spend the time to innovate and the effort to develop the business model, and then you can learn from their successes and/or mistakes. If there is a proven business model, study it, learn from it and then make it better.
Pretty simple ideas, right? Obviously, running a successful business is not this simple but fundamental principles like these are always a good place to start. After working for Meaden & Moore for more than 20 years, I have found these 3 factors to be very true. Many businesses have succeeded and struggled based on these 3 factors.