I wasn’t sure how to answer. Business success, especially the success of a small firm, is an amorphous thing. An advertising campaign is successful if the revenue it generates exceeds its cost. Certain elements of a legal practice can be defined as successful, sure. A client representation is successful if the client is satisfied at the end of it. But what is business success?
It’s an important question for a small firm owner to answer, because it has to be part of our consciousness as we decide — almost daily — the future of our firms. Every time we consider taking a new client whose case may take a long time to resolve, we are asking ourselves in essence, “Is my business successful?”
It’s definitely a subjective analysis, but to say that everyone has to decide this for themselves is not only a cop out — it’s dangerous. It is dangerous because it leads solos, small business owners all, to the conclusion that their businesses have failed only if they say they have failed. But four out of five small businesses do fail. This economy calls for a certain amount of pragmatism. Aspirations are good, but you can’t eat aspirations (without a starch of some kind).
So what defines business success? In the end, it is the prioritization of four elements: satisfaction, income, stability, and results. I didn’t just pull these out of a hat; the first three are generational priorities and the fourth is pure business.
So much has been written about the millennial generation’s obsession with job satisfaction that the concept requires little explanation. For solos, however, the element of job satisfaction is substantively different than the question of whether a Business Analyst III has “job satisfaction” at his Wall Street investment firm. It’s not just about work/life balance. In fact, for solos hoping for a great work/life balance opening their own firm, the first few years are going to be a bit of a rude shock.
No, job satisfaction in this context means more pride in ownership and ownership of results. Being a solo practitioner is supposed to mean that you take the kinds of cases you want and have the satisfaction of doing the kind of work you like. When you get a good result for a client — whether it’s a judgment in your client’s favor, successfully obtaining a patent or helping to get a (I hesitate to use the word) “successful” divorce — solos have the additional satisfaction of being solely responsible for helping make someone’s life better.
How does to job satisfaction relate success? For small firms, it is often difficult to work only in the fields you like. Solos often have to take cases in other areas where they are competent just to pay the bills. A business starts to find “success” when you find yourself taking fewer and fewer of those cases and can generate revenue solely or primarily taking the cases you want. If you find yourself consistently working in a practice area where you’re not happy, even if you are making money at it, it’s hard to say that you have a “successful” solo career. At that point, you just have a job.
Not that there is anything wrong with “just” having a job, especially these days. Income has to be a factor in defining success. The question is simply, how much?
Unlike millennials, Gen Xers who grew up in th ’80s and ’90s, when jobs were more plentiful, have the generational reputation of prioritizing income. A “successful” business was one that made a lot of money even at the expense of satisfaction or stability, as the dot-com boom of th ’90s showed. Of course, the subsequent bust showed exactly why making money alone should not be the sole sign of a successful business.
To a certain extent, it only makes sense that income is a key factor of business success; no sensible definition of “success” would categorize a business as successful if it was consistently under water. But can a solo who barely breaks even every month be considered a success?
I would say yes. There is certainly a public perception that lawyer = successful = rich. Any solo who has ever had to explain why a credit card payment was late, let alone been one of the 47 percent who has had to ask for public assistance, has encountered a quizzical reaction by answering “lawyer” to the question “what is your job?” Most solos aren’t rich, and most have had to get assistance from someone at least in the beginning: a small business loan, sliding-fee medical services or relying on family and friends. But there is a hard floor below which it can never be considered “successful,” no matter how satisfying your job is.
Farther back still, baby boomers and Traditionals prioritize something different: stability. It was an emphasis on building something solid that you could count on for years to come and provide for you and your family. It wasn’t the pursuit of wealth, nor was it job satisfaction. For many in that generation, asking if your work made you happy made as little sense as asking if eating made you happy. While we can certainly enjoy food, we don’t eat to be happy. We eat to survive so that we can do other things that make us happy, and a job was viewed the same way.
(For what it’s worth, though, these are also the generations that invented and popularized Spam.)
For solos, a successful small business has to have some element of stability. This is perhaps the hardest and last factor to achieve but also the best indicator of a successful business. Stability doesn’t necessarily mean a consistent monthly income. Some small businesses are built around a few large paydays per year. More are built around some combination of the two. All should have the same definition of stability: knowing that the amount of revenue you bring in will last until the next time you bring it in.
This isn’t the same as income. The important point is not how much you make but the comfort of knowing you will make enough. If you consistently make as much as you need and are confident it will continue, your business is stable. If you have always made as much as you need but have no idea if it will continue, your business has been lucky. Successful businesses aren’t lucky ones.
I said earlier that a successful client relationship was defined as one where the client is happy at the end, and I meant it. But as far as the business is concerned, results are key. Although I can’t say I haven’t seen people try, you simply can’t build a successful business around poor results for satisfied clients.
Why is success so hard to define? Because it depends on your prioritization of at least the first three factors. It’s fair to say you have a successful business if you love what you do and if it is a consistent and stable firm, even if you never do much more than break even. Or you may choose to open a practice in a field you don’t really like but consistently make a lot of money; that’s successful in its own way. But you need to meet the minimum standard in all four before you can call your small firm “successful.” After that, which is most important is up to you.
Contact Michael Kemp at email@example.com.