I believe that the three most important measures of business success are profit, impact, and joy. All businesses should strive to be profitable, to make a positive impact in the world, and to create happiness (joy) for the owners and for all stakeholders of the business.
Readers interested in corporate social responsibility will notice this is similar to the triple bottom line (TBL) concept that encourages business to focus on people and planet, in addition to profit. Here’s an interesting article on that concept.
My goal isn’t to reinvent the wheel here, but rather to tweak it somewhat for the small business context. The original TBL concept is by and large aimed at and designed for large corporations. The triple bottom line that I use for my business, and the one I focus on with my small business clients, is profit + impact + joy.
Let’s look at what I mean by each of these concepts:
Simply put, profit is the difference between the revenues and expenses of the business. But more importantly, profit is the difference between staying in business and not staying in business.
Profit comes from creating value for your customers. It comes from creating a product or service that people are willing to pay more for (hopefully a lot more for) than it costs to produce. Not coerced, or tricked, but willing. They buy what you’re selling because the value of it, to them, is more than the value of the money they pay for it. The exchange has made their life better in some way—for a moment or forever or for any period of time in between. In this sense, the more value your business creates, the more profit it should make.
Conversely, if customers don’t value what you’re selling, they are not going to buy it, and the business won’t make a profit. And businesses that don’t make a profit for a long time don’t tend to stay in business for a long time. That is a shame for many reasons, not the least of which is that the business won’t get a fighting chance to have its intended impact in the world.
Impact is the difference your business makes in the world. If you have a clear purpose for your business (as articulated in your vision, mission, and core values), you’ll find clues to your intended impact there. As in, why does your business exist? In some way, it exists to solve a problem, and in doing so, it makes people’s lives better. And making people’s lives better makes the world better.
Impact doesn’t need to be a grandiose, save-the-world, black-tie acceptance speech sort of thing. No lives, or whales, or trees need to be saved by your business in order to make a significant impact. But to be successful in this day and age, your business does need to make some positive impact on your community, or your industry, or your employees, or your other stakeholders, or something else, or any combination of those.
Why? Because in today’s world, meaning is currency, and meaning comes from impact. Meaning is no longer a nice-to-have. More and more, customers want a reason to do business with you that extends beyond the nuts and bolts of your product or service. Your employees want to be part of something bigger than themselves, bigger than the business. And most important, as a business owner, if you can’t answer the question what’s it all for? with something that involves impact separate from profit, there will be a void in your life—and in your business.
Joy is the simplest of the three measures of success, but oftentimes the hardest to achieve. Does your business make you happy? Does your business make your life better?
Michael Gerber highlighted this concept so well in his classic book The E-Myth. In it, he writes that many small business owners get into business because they love what the business sells, but they end up hating the business soon after. For example, a talented cake maker might open their own bakery because they love baking cakes, not realizing that once you’re running a business, baking cakes becomes the least of your worries. With everything else involved in running the business, they end up hating what they once loved to do, and unhappy in business and in life. This is a tale repeated often by small business owners everywhere.
So even if your business is making a profit and an impact, if it’s not making you happy—if you’re not deriving any joy from your business—then what’s the point?
Aristotle got it right when he said that “happiness is the meaning and purpose of life: the whole aim and end of human existence.” Running a business is a huge part of your human existence—if it doesn’t make you happy, your life will be unhappy. That’s no fun.
The concept of joy in business goes further. It extends to your employees. Are they happy to work for your business? It extends to your customers. Are they happy to do business with you? It extends to all stakeholders of the business—investors, suppliers, community members, and so on. But it all starts with the business owner—if you’re not happy, it’s hard for your business to make others happy. Joy is like leadership: you can’t fake it for long.
Perhaps you use different measures of success in your business, and that’s great—you should do whatever works for you and your business. But for me, and the businesses I work with, prioritizing, creating, and measuring profit, impact, and joy are essential on the path to business success.