The Perennial Business Model

Wednesday, 28 March 2018 16:12   |   Written by BY NELSON LETSHWENE
Investors like Warren Buffett are referred to as wealth investors because they almost always look at their investments with the long-term view
Image: Investors like Warren Buffett are referred to as wealth investors because they almost always look at their investments with the long-term view

QUESTION:
When you build a business, you have to ask very important questions. One of the most important questions is: how long do you wish to be in this business? How important are critical questions throughout your business?

ANSWER:
In his book, Why I left Goldman Sachs, Greg Smith, discusses different investors. He points out that the investor who can be taken for a ride is often the investor who does not know how to ask questions.

The right questions are critical in the investment path, of which entrepreneurship is one of them. Investors like Warren Buffett are referred to as wealth investors because they almost always look at their investments with the long-term view. Then there are day-traders who are looking for quick cash.

In entrepreneurship, the question of longevity is critical to the purposes and approaches that an entrepreneur will apply in their business model. Think of the wine maker. Such a businessperson cannot be in it for the short run. From initial investment to profitability may be measured in years not months. The real estate entrepreneur must also take the long view to their investments. All the capital that they put in initially may take years to come back.

How does a classic become a classic? Can the creator of a classic decide from day one that they are looking to create a classic? In his book, Perennial Seller, Ryan Holiday asserts that one can set themselves up from day one to create a classic. A classic book. A classic piece of art. A classic music record. A classic business, etc.

The mindset of a perennial business creator looks beyond quick success and goes to meeting the long-term needs of humanity. It not only addresses today’s urged need, but it identifies a perennial need and comes up with perennial models that will answer the same human need in different ways over the coming years and decades.

Perennials are created from models that are set up to create perennials. While luck may play a role, but the businessperson needs to know how to set up systems, processes, procedures, and products that will last a lifetime.

We have seen many businesses that tell you they’ve been around for over a century or more. What were they selling a hundred years ago that is still in demand today? Will that product, service, idea, or philosophy still be applicable and in demand a hundred years from now?

The business person who goes into business only to solve the quick cash needs of today may not be in the mindset to build a perennial business. Perennials a built on purpose. When you think of your business idea and the needs of humanity it is seeking to address, will these needs still be there a hundred years from now? What kind of model must you set up today, to ensure that you will still be in business a hundred years from now?

Nelson Letshwene is the managing consultant at Moedi Financial Training - leaders in personal finance education. He is also the author of The Money Field, and Seven Essential Money Skills. For questions and comments email This email address is being protected from spambots. You need JavaScript enabled to view it. or follow him on twitter @101silverline