Guest post by Megan Totka
When you ask business owners their top priorities, they will likely say they want to know how to save time and money while running a business, and how to run a company that surpasses the test of time. The average lifespan of today’s companies on the S&P 500 Index is typically only 15 years according to Yale Lecturer Richard Foster. In the 1920s, they lasted for an average of 67 years. The trend is both sad and startling.
Any organization can follow these five tips for longevity to get a better footing on the path to becoming a successful business that could potentially last 100 years:
Maintain a razor-sharp focus on customers
Companies that develop an unwavering focus on the way people interact—like the Girl Scouts of the USA—will last for generations. The Girl Scouts have always remained relentlessly focused on understanding each generation of girls in order to stay relevant. The Girls Scouts realize that its customers’ needs are constantly evolving and moving, and by focusing on that fact, they've been able to keep up.
Value company culture
Build a solid company identity through meticulous management of the organization’s culture. The culture of a company speaks volumes. It must be cherished and protected in order for long-term success to endure. Every company has a personality that is encompassed by the people within it, but the total is greater than the sum of its parts. A solid company culture can make a fundamental difference in the business’ success, both in the five-year range as well as the 100-year range.
Be willing to chart new territory
Customer needs constantly change. One common thread among businesses that have celebrated their centennial birthday is that they have been willing to take risk to expand their offerings to meet changing customer demands. Perhaps more now than ever before, customers want more than a great product or service. They need their products and services to synch with technology and keep on the cutting edge.
Place high value on core strength and values
If the time comes and a large-scale change needs to be made, take time to prepare for it and implement the change. Procter & Gamble began in 1837 and is a great example of a company that established tradition and values and both innovative and practical products for its consumers. The company’s strength and priorities have built its initial success and lead to achievement for many years.
Have conservative financial practices
To create a company that can live to be 100 years, you should lean hard to the conservative side when it comes to borrowing money and be aware of the risks of financing your business on credit cards. Take the more profitable and rich seasons and use this money as reserves for your company when the profit is thinner. Create a compensation plan that maintains the company’s financial health, such as paying a base salary plus commission to promote involvement among the company’s members. Does this sound similar to the way your company is run? If not, then try to adjust your business—you don’t want your business to fail. These steps and characteristics describe many well-known companies that have endured 100 years in business, and anticipate more growth for years to come. This shows that they must be doing something right.
Megan Totka is the Chief Editor for ChamberofCommerce.com. She specializes on the topic of small business tips and resources. ChamberofCommerce.com helps small businesses grow their business on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.