Succes | Growth

The only way a business can be successful is if they are clear on how they measure success.

Traditionally, success is measure financially and to gain more success businesses typically need to grow more. When you dig into that definition a little deeper you find that it is not as simple. Different industries use different financial measurements of success. Some look at financial ratios, others look at market penetration and still others look at the bottom line. Financial measurements of success have the luxury of working with numbers, but it still isn’t straight-forward.

Companies that tackle social and environmental problems don’t always have clear-cut definitions of success. In fact, for some businesses success might mean shrinking in size rather than growing.  

A recent article in Stanford Social Innovation Review explored the relationship between success and growth. The website DoSomething.org decided to cut back on their programing in an effort to grow.

They recognize the importance in being hyper-focused on the desired impact of their work. Many of the programs they cut were “successful”. These programs received media praise, funding, and high number of participants, but they did not directly contribute to the overall mission of motivating 100,000+ people to participate in campaigns for change. What DoSomething.org did is an excellent example of a focused definition of success that is de-coupled from monetary growth.

Corporate Structure

I love structure. It is like poetry in the way that it distills intent, worldview, and hope for the future in a deceivingly simple set of rules, processes or physical forms. Structure manifests in many ways - from the physical structures of buildings, to intangible concepts like rules in a game.

Corporate structures are no different. They embody intent and hope for the way an organization will operate in the world, within the body of rules/laws created by government. For example, a sole proprietorship lays the groundwork for a small business. It is very personal - revenue, liability, and funding are all personally tied to the owner. As a result it is the easiest business entity to start with little paperwork to file. A limited liability takes more paperwork and requires more fees to set-up, but it protects the owner from personal liabilities, provides different taxation and funding options. For me, a LLC is more optimistic about the future growth of the business and takes into account the “what-ifs”.

There are several new types of corporate structures that have sprung up recently.  They fill the arbitrary void between non-profit and for-profit businesses. These new businesses are called social benefit corporations or benefit corporations depending on which state the business has incorporated in, but they mean similar things. Instead of only providing financial value to stakeholders they also commit to provided additional environmental and/or social value to the stakeholders that they serve. 

Thinking about the future of a business and the impacts it will have on the world is a great place to start when exploring corporate structures for your business. What's most important? Who will your business serve? What impact do you want to have on the world?