3 Traits of Sustainable Businesses

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SDS 054: 3 Traits of Sustainable Businesses

Happy New Year! thank you for reading issue 054 of Startup Definition Sunday (SDS). You can read past issues here.

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At the start of every year, I feel most excited about the potential to discover and support new companies. The ones that thrill me the most are those building sustainable business models from the very beginning.

Last year, as the Africa Lead for Accion Venture Lab, I led new and follow-on investments in fintech companies. Each of these founders shared a common goal: to create businesses that could stand the test of time.

Even though their business models were different, 3 key traits stood out. These traits made us confident that they were on the path to building sustainable businesses. Here's what they were:

Focus on Recurring Revenue Streams: Sustainable businesses thrive on consistent, predictable income. That’s where recurring revenue models come in. Whether it’s a subscription service, a retainer-based offering, or repeat customers, having steady revenue creates stability. If your business relies on one-time sales, think about adding recurring elements. For example, you could offer monthly or annual subscriptions or create ongoing services that meet customer needs. The goal is to build "stickiness"—a reason for customers to keep coming back.

Diversify Your Income Sources: While recurring revenue is vital, relying on one income stream is risky. Diversifying your income helps protect your business if one product or service doesn’t perform well. Look for ways to expand. Could you launch a complementary product or service? Could you enter a new market or target a different customer segment? The more diverse your income sources, the better you can handle market ups and downs.

Foster a Culture of Innovation: In today’s fast-changing world, innovation is essential. Businesses that adapt quickly can stay ahead of competitors and industry changes. Encourage your team to think creatively and constantly seek improvement. Listen to customer feedback, review your business model regularly, and stay updated on industry trends. By fostering innovation, you’ll not only survive but thrive in a competitive landscape.

My two pesewas:

Building a sustainable business isn’t easy, but it’s worth the effort. Focus on recurring revenue, diversify your income, and nurture a culture of innovation. These steps will help you lay a strong foundation for long-term success.

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