Many start-ups believe that fast growth and attracting investment (angel and V.C. money) are the two keys to their future success. They identify a high-risk, high-growth business idea, form a team and try to raise venture capital funds to build a product or service that addresses said need. They try to show growth as quickly as they can (often without regard to profitability) in order to attract continued investment. They hope to get traction and cash out by being acquired by a larger company or eventually having an IPO.
While focusing on growth and funding works out well for some entrepreneurs, it’s not the best model for everyone. This model leaves little concern for the quality of life of the entrepreneur that founded the business. You’re generally tied to the location of your investor and end up working in an office for 50-60 hours per week. You might eventually gain financial and time freedom after an exit years down the line, but that’s the exception rather than the rule. If you’re concerned about your quality of life while you’re building your business, consider optimizing for other core values than fast growth and the likelihood of future investment.
“Fast Growth” and “Future Investment” are two examples of what I like to refer to as “Core-Value Currencies”. For the purposes of this discussion, a currency is simply something that’s measurable, finite and has value to you. A core value is something that matters more to your business than anything else. Thus, a core-value currency is a specific metric that you optimize for and shapes future business decisions.
A common core-value currency that many lifestyle entrepreneurs focus on is time. They may only want to work 30 hours per week. This changes the fundamental question they ask themselves every morning from “How can I best grow my company?” to “How can I grow my company while only having to work 30 hours per week?” Every future decision regarding your business will be made in light of the core-value currencies you select. You will make fundamentally different decisions about your business if you’re optimizing for something else than merely top-line revenue. You’ll be less likely to get distracted from your mission because you know what you’re trying to accomplish and will have to say no to everything that doesn’t optimize for one of your core-value currencies.
Examples of core-value currencies include the following:
- Gross Revenue – How much money can company can my company bring in (regardless of expenses)?
- Size – How big can my company get? How many customers and employees can it have?
- Growth – How quickly can I grow my company?
- Profitability – How can I make sure that I’m taking home the most money at the end-of-the day?
- Efficiency – How can I get the most amount of work done with the least amount of human capital?
- Time and Flexibility – Can I work on my own schedule without regards to anyone else’s demands for my time?
- Fame – Do people know who I am, respect me and talk about me?
- Location Independence – Can I run my business from wherever I want, or am I tied down to a specific location?
- Generosity – Are we giving our customers the best possible value for what they’re paying?
- Resilience – How long can my business run without me being directly involved?
American Consumer News, LLC’s Core-Value Currencies
My company (American Consumer News, LLC) doesn’t look or operate like most companies do. We’ve had a lot of success in the last couple of years (125,000 newsletter subscribers and counting), but we have no office, no regular working hours and a very lean staff (2 employees and 3 part-time contractors). We rely heavily on software systems, automation and outsourcing. My team members have the freedom to work where and when they want (as long as they get their work done). I’m not concerned about raising venture capital, how big my company appears to the rest of the world or how many times American Consumer News, LLC gets mentioned in business publications.
We also have a very simple business model. We create content and generate revenue from advertising and newsletter subscriptions—that’s it. We’re not constantly worried about creating new products, moving into new categories and businesses or latching on to the industry trend of the month. We’re very focused on finding ways to do what we already do better through experimentation and split-testing. We’re also constantly tweaking and improving our products and services to provide a better customer experience.
We’re a weird company by any measure and I’m totally okay with that. Our core-value currencies are profitability, flexibility and operational efficiency. We’re more focused on what we can take home at the end of the day (profitability) than what our top-line revenue number is. We believe that everyone involved in the company should have the freedom to work where and when works best for them. We also believe that anything that can reasonably be automated (or systematized) should be automated (or systematized) in order to gain maximum operational efficiency and a consistent experience for our customers.
What Are Your Core-Value Currencies?
No one can pick your company’s core-value currencies for you. The core-value currencies you identify should align with your personality and your goals for your business. You should identify two or three measurable priorities as your business’s core-value currencies and permanently seer them into your company’s vision statement. Let your core-value currencies shape your priorities and use them as an evaluation tool for every decision made in your company.
(Note: There’s also a great episode of the TropicalMBA that discusses optimizing for core-value currencies.)