In the past couple of years and even today, for some ridiculous reason, there are a few prominent businesses that are being marketed (via the mainstream and social media) as being SUCCESSFUL although they have yet to implement a business model or a sustainable working business model; they have never reached break even point and the only reason they’re still in existence is because they were/are able find investors based on HYPE (or perceived HYPE). Therefore, this post is intended to remind the masses about what a real business is and how a REAL successful business is defined. This is Business School 101 (boring but crucial knowledge for those aspiring to be successful business owners not just successful at raising or borrowing masses of dollars).
A business is an entity generates money from customers who pay for a product or service that derives directly from that entity.
Most businesses that are started fail. This is because they are unable survive to the point of reaching Break Even point; their revenue generated (growth) isn’t fast enough and/or high enough to cover the start-up nor fixed operational expenses that are NEEDED to keep business going and revenues growing to the point of reaching Break Even point.
Break Even point:
Is the moment where the amount of revenue generated = all operational expenses (including liabilities/startup costs).
The core reasons why many business are not able to survive long enough to reach break-even point:
- Human capital reasons
- No longer able to service consumer needs/wants as well the competition
- Not enough funding to keep operations going
- and there are many more..
Bottom line, for whatever reason, most business are NOT able to sustain long enough to reach break even point. This fact is the reason why revenue growth potential within a business model is so important. It’s as important as having the right human capital.
Even when a business runs a great working business model, if that business does NOT reach breakeven point before the invested/start-up capital runs out, it’s DEAD - unless that business is able to raise more money.
Note: A business that has unlimited funding but never reaches breakeven point, is NOT a success business (this information is forgotten by alot of “So-Called” savy investors/venture capitalists)
MOST IMPORTANT: A Successful Business is one that is profitable, self-sustaining, and has a business model that consistently generates enough revenue to cover all operational expenses (including liabilities) of the business itself and all personal expenses of all active (not passive) owners so that those owners do not ever NEED another source of revenue. A successful business generates money even when the active owners are sleeping. In addition, a successful business is not a side business nor a freelance business.(READ THIS PARAGRAPH AGAIN)
Business 101 is done.
If you need help building your brand (OR BUSINESS); contact us: @mw4ever + @mwlives = MW