Longevity In Business: Why It Matters And How To Improve It

According to the Bureau of Labor Statistics, roughly 20% of small businesses fail within their first year of opening. After five years, half of companies go out of business — and only about 30 percent make it to year ten. There are many factors that can influence whether a company stands the test of time or whether it goes out of business after just a few years. 

To succeed, entrepreneurs must make the longevity of their business a top priority. A successful entrepreneurial career requires more than just launching a company. It’s ensuring that it sticks around for the long haul.

What Is Longevity In Business?

While you might assume that longevity simply refers to keeping a company in business for decades, this isn’t the only possible definition in the business world.

Longevity should always be considered in relation to your goals for the business. For example, if you start a business that you hope to sell for a profit, your longevity priority is keeping it profitable until you can successfully sell the business. Of course, for those who start a business stemming from their own passion and drive, longevity can mean building a company that will survive even after they are no longer around to guide it.

Longevity depends on a variety of factors, not the least of which is providing products and services that are in demand by your target audience. You must also be able to adapt to changes and disruptions in the marketplace. When making goals for your business, ensuring that your company will last long enough to achieve those goals should play a foundational role in all strategy-related decisions.

Why Longevity Matters

The longer you’ve been in business, the easier it is to gain new customers. As web designer Lexie Lu writes, “When you’ve been in business for decades, you have a pretty good idea of what your clients need. Explain how long you’ve been around and why other companies trust you to get the job done. You can even highlight some testimonials from customers who’ve stayed with you for years. They can probably explain better than anyone why they choose to remain with your company year after year.”

The longer you stay in business, the easier it is to position yourself as a true expert in your niche. Your target audience will subconsciously perceive you as offering higher quality than your competitors. The simple fact that you’ve been around for a long time makes it easier to gain new customers.

Perhaps even more importantly, longevity allows you to gain valuable learning experiences that you can use to continually improve your business. Successes and failures help you determine what works and what doesn’t so you can continue improving.

How To Enhance Your Company’s Longevity

The way you run your company will have a big influence on its longevity. Of course, it all starts with providing actual substance with your products or services.

Camus Lam, Chap Mei Group chairman, explained, “Our company has been in the toy brand for 50 years. Continuously striving to find a new niche for toy development and implement new ideas in product design — all the while paying attention to what kids enjoy — has helped us thrive in an ever-changing marketplace. While the products themselves have changed over the years, prioritizing innovation, safety and fun with original designs has remained consistent. This keeps our brand relevant and profitable.”

While a commitment to quality, innovative products and services is a key predictor for longevity, other actions by business leaders can be just as crucial.

As Jill Johnson, president and founder of Johnson Consulting Services writes for Foundry Magazine, “Fiscal discipline is fundamental to long-term business or enterprise success. Yet, only a few leaders have the self-discipline to manage their cash flow for the inevitable peaks and valleys. […] They never prepare for the future because they’re focused on living in the moment. Some make ill-advised decisions that create financial crises rather than making prudent commitments they can realistically handle. Successful leaders of enduring enterprises focus on building real net worth by mastering financial discipline and tightly controlling what they spend.”

Business leaders must think carefully when making growth-related decisions. Scaling a company can lead to even greater successes — but it can also present significant risks. Knowing your own capabilities can be key to making the right decision. For longevity’s sake, some entrepreneurs may find it easier to manage overhead and other responsibilities by maintaining a smaller size, rather than aggressively expanding.

Finally, business leaders must be mindful of the ever-changing forces at work in their niche. New technologies, the introduction of disruptive competitors and even supply chain problems can dramatically alter the established way of doing business. Companies that look forward to identify new opportunities can respond quickly to adapt to changing customer expectations.

While you can’t control every factor that influences the lifespan of your business, taking actionable steps to enhance your company’s longevity will enable you to achieve your financial goals. No matter what you have planned for your career, launching a company that is truly built to last is one of the best ways to succeed.