Who Cares About Costs? Here's How to Structure Your Business to Last

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
Will be used in accordance with our Privacy Policy
Who Cares About Costs? Here's How to Structure Your Business to Last
Image credit: Shutterstock
Magazine Contributor
3 min read

This story appears in the August 2013 issue of . Subscribe »

Q: How do I build a business that will last for decades?

A: With very few exceptions, the answer to this question is the same for any small business, whether it's looking to cash out in 50 months or 50 years. And it's not really about costs; it's about the structure of the business. Costs will flow naturally and efficiently out of a sound structure.

Many public companies operate shortsightedly, pumping up their quarterly numbers to boost their stock prices, with sometimes disastrous long-term results. A business with an owner who measures growth and progress in years, not months, is a much easier ship to steer.

Follow this basic checklist to increase your chances of growing for years to come--assuming, of course, that people want the product you're selling.

Establish strong financial controls. Doing so produces solid information for decision-making and reduces the risk of theft and fraud. Put simply, until you know where every penny's going, your business isn't on sound footing.

Minimize distractions. As a CFO, I've seen firsthand how an owner, freed from daily worries over cash flow, can successfully concentrate on the future--building relationships, developing new products and services and overseeing other big-picture issues. Hire trustworthy and smart people to handle the details. They're worth it.

Increase sales. Obvious? Yes, but never forget that a larger company is inherently less risky than a smaller one.

Diversify products and services. Spreading sales over more customers, product lines or markets reduces risk and enhances opportunities for growth.

Streamline, codify and document processes. The hallmark of strong companies is the quality, consistency and documentation of the way they operate. (This is the first step wannabe franchisors take to determine if their ideas can be replicated.) I often tell owners that if they want to be a bigger company eventually, act like one now.

Improve efficiencies. Since most businesses are valued by a multiple of their earnings, every dollar of improvement here will result in more dollars of value, whether it's four years from now or 40.

Protect your intellectual property. Make sure you have appropriate rights for your trademarks, names, designs, technologies, etc. Spending a few thousand dollars on an IP attorney now can save millions--and headaches--later.

Maintain and improve property and equipment. Maintain access to money that can be used to take advantage of technological improvements, expand operations and keep everything in running order.

Reduce employee turnover. Bear in mind that shelling out more money doesn't necessarily create a loyal and productive work force. Respect, fair management and inclusion in decision-making go a long way.

Avoid competing on price. A focus on undercutting the competition can start a vicious cycle that destroys your profit margins. You want customers to choose you for your superior products and services, not because you're the cheapest.

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). By continuing to use this site, you are agreeing to the use of that data. For more information on our data policies, please visit our Privacy Policy.