King Arthur Flour has been in business since 1790. The insurance provider Cigna has roots that go back to 1792. DuPont began in 1802. And yet, those are the outliers. Half of startup businesses in the U.S. fail in their first 5 years* and the average lifespan of a publicly traded company is just 10 years.†
Why do some businesses last so long while most fail so soon? As any of the best business schools will tell you, success and failure is most often about decision-making. If you’re looking to make your business last well into the future, here are some of the steps you can take.
Prudence is not typically a business buzzword, but maybe it should be. One of the fastest ways a business can get into trouble is to take too many risks. This is particularly true when it comes to loans. Too many businesses get overly optimistic during good economic times and end up over-expanding. Then, in the coming years, the loans taken out for that expansion end up crushing the business. If you don’t want your business to become a victim of risks-gone-bad, you must always remain prudent in the risks you take.
When you do take risks, one of the better options is to develop your own supply chain. Most businesses rely on outside vendors for everything from machine parts to shipping services to packaging for their products. However, if you can create an in-house supply chain or work out a deal for a vendor to exclusively supply you, you can reduce the chance that a major supply chain disruption causes your business to fail. While investing in your supply chain can be risky, it can also create stability and provide long-term dividends.
Too many businesses are built like a house of cards. If one division or aspect fails, the whole business comes down. To avoid that, you need a business structure where there is enough communication and redundancies to prevent a single failure from toppling your business. For instance, if you have one person in charge of doing your books and that person does a bad job or embezzles, you’ll be in serious trouble. But if you make sure multiple people are reviewing the books, you can better avoid catastrophe. Having employees with multiple specialties and departments with interconnections can create a structural latticework that prevents collapse.
One of the ways businesses fail is that they do not properly recognize upcoming threats and opportunities. And one of the reasons businesses miss those threats and opportunities is that their entire management structure is comprised of people of similar mindsets and backgrounds. Diversity in business can help you avoid such mistakes. When you employ people with a broad range of cultural and life experiences, you’ll likely have more points of view, which can help you better recognize new threats and new opportunities as they arise.
When you do see threats and opportunities, don’t sit still. Companies that last are companies that continually adapt to changing business and social climates. Few businesses ever survive by “riding out” a new threat or doubling down on an old way of doing business. In fact, a failure to adapt can be linked to the demise of many companies, such as Blockbuster, Pan Am, and Circuit City.
Business is organic. Which is to say, growth is rarely a straight line but more often a branching out and/or a new interconnection of business ideas. Imagine staring at an apple tree through a cardboard tube. You want to sell apples, so you start heading toward the tree. But if you continue staring through that tube, you might miss the fact that there are other trees nearby with much better apples, or that there are trees with oranges, which are much more lucrative, or that there are a ton of other people picking apples but they all need someone to sell them baskets. Thinking biologically means thinking in multiple directions at once and embracing serendipity and natural interconnections instead of simply moving on a set course from A to B.
Creating long-lasting success requires knowledge of how business and management work. If you want to improve your ability to keep your business running well into the future, you should consider earning a business degree or management degree. Which of the many degrees should you choose? A Master of Business Administration (MBA) degree can be an excellent choice.
With a degree in business administration, such as a bachelor’s or master’s, you can gain the knowledge and skills you need to run your business successfully. And attending a top MBA program no longer means packing up and moving to a distant city. It doesn’t even have to mean attending classes in a physical classroom. Thanks to online education, you can now earn your business administration degree more conveniently than ever before. When you enroll in any online graduate degree program, including an online MBA program, you can complete the majority of your coursework from home and on a flexible schedule that can allow you to keep working at your business full time.
Whether you’re an entrepreneur or corporate manager, earning an MBA online can allow you to improve your business without having to take a break from your business. It’s what makes an online MBA such a great choice for anyone looking to build a company that stands the test of time.
Walden University is an accredited institution offering an online Master of Business Administration program. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.
*Small Business Administration, Small Business Facts, Do economic or industry factors affect business survival?, on the internet as a PDF at www.sba.gov/sites/default/files/Business-Survival.pdf.
† M. Daepp, M. Hamilton, G. West, L. Bettencourt, The mortality of companies, Journal of The Royal Society Interface, on the internet at http://rsif.royalsocietypublishing.org/content/12/106/20150120.
Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.