How do you measure the success of a business? For most of us, we measure a company's success in financial terms. What are the company's sales and profits? Are revenue and profits growing or shrinking? Is the management team delivering a reasonable return to its shareholders?
For public companies, defining success in financial terms makes a lot of sense to me. Companies should serve the interests of their shareholders. Public companies have widely diverse shareholders. The board of directors and the executive team don't know anything about the shareholders' divergent circumstances and needs. Using money as a proxy for serving the shareholders makes perfect sense. Yes, there are other issues at play -- creating jobs, providing a valuable service to the company customers, acting in an ethically and responsible manner -- but the measure of success for public companies is how much money they make. (Notice it is not how well their stock is doing, which if often largely outside of management's control.)
Things aren't so simple when we talk about private family businesses. Whether it's a special events company in Salt Lake City, a plumbing business in Chicago or a clothing store in Atlanta, family businesses should differ from public companies in how they measure success. Rather than define success in purely financial terms, the private business owner needs to ask himself the following questions. Is my business helping me create the life I desire? Is my business contributing to, or detracting from, my happiness?
Think back to why you or someone you know started a business. While your initial answer may be, "To be my own boss," it is actually more basic than that. Entrepreneurs create companies to meet the business owner's needs -- food, shelter, clothing, entertainment.
Somewhere along the way, our priorities diverge from this goal. Once we have these basic needs filled, we often start to use money as a way to keep score. Money is a necessary benchmark for unseen investors, but when you are the sole investor, money is usually a poor way to judge success.
Success for a private business should be based on building the kind of life you desire. Once you are able to support your family, a private company serves only one purpose -- to enhance your happiness.
Does that mean money doesn't matter? Of course not. Money is a critical tool to build the life we desire. It allows us to live in nice homes, educate our children, and take family vacations where we can connect to the people we love the most.
My point is money is not all that matters. Most of us spend more time at work than at any other single activity in our life. We want that time to be life giving, not life draining. If you are working hard, earning a lot of money, but coming home each day feeling drained and beaten, I encourage you to ask yourself the following three questions:
1. How does your business give you the opportunity to create meaningful relationships?
2. How does your business give you the opportunity to use your signature talents to engage in work you find energizing and meaningful?
3. How does your business give you the regular opportunity to make a positive difference in the lives of others?
If you are satisfied with your answers to these questions, give yourself a pat on the back. If not, take another look at how you define success. Keep in mind, if we define success as anything other than happiness, we are in danger of climbing the ladder of success, getting to the top and finding it was leaning against the wrong building.
David Geller is the author of Wealth & Happiness: Using Your Wealth to Create a Better Life. He also serves as a motivational speaker and the CEO of Atlanta-based GV Financial Advisors. His new book is available through www.amazon.com or at www.gvfinancial.com.