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5 Reasons I Love Boring Businesses

by Dan Abatte, co-founder of 81-c

“Making it” is relative.

In my 20+ years of entrepreneurship, I’ve seen a big change in how success is defined. Entrepreneurs nowadays want to boast about brand-name investors, huge rounds of funding, and a team of high-skill employees. Are you fresh out of Y Combinator with $1 million in funding at a $10 million valuation? You must be the man (or woman)! Did the former head of the SEC just join your board of directors? You’re clearly killing it!

Just browse any business publication to see this flavor of headline daily. These stories get posted and shared to generate the social media love a lonely entrepreneur craves.

Flattering coverage is rightfully an important, exciting milestone. There’s nothing wrong with celebrating progress along the wild rollercoaster of entrepreneurship. These hyped headlines are quickly becoming the yardstick for how we measure entrepreneurial success. But flattering media attention too easily shifts focus away from the metrics that matter. A high-profile funding round from an all-star investor doesn’t guarantee success. Nor does building a board of hotshot directors magically get a company through its ups and downs.

Call me old school, but I believe in metrics like growth, revenue, and profit. I’ve focused on them ruthlessly throughout my career, and I continue to work on them in the companies I build and acquire. It’s not exactly glamorous. You tell me: how sexy is my grant writing business? It’s name will probably never grace a Techcrunch page, yet it generates several hundreds of thousands of dollars in free cash flow every year. Grant writing isn’t especially “cool,” but what’s cooler than profit?

While many entrepreneurs chase the media spotlight and make decisions based on metrics that don’t matter, I’ve got my attention on buying and improving overlooked companies. I’m happy to have others call it boring and unsexy.

Here’s why I love boring businesses, and why you should too.

1. They reach profitability more quickly.

To echo my earlier sentiment: at the end of the day, profit is what really matters. All other metrics are irrelevant. You can’t pay for office space with headlines. Growth rates don’t pay employee salaries. It’s somehow become acceptable for entrepreneurs to take their eye off profit, focusing instead on aggressive growth at any cost. They’ll even acquire customers at a loss for an extended period of time.

If your company builds spaceships, you face a long road to profitability. A plumber can theoretically run a profitable business from day one.

2. They’re less dependent on external investors.

Venture capital has a big say in which companies and projects see the light of day. The VC industry is large enough to prop up scores of well-funded tech startups that might otherwise never exist. But there’s a lesson to be learned here: these good times can’t last.

In a bear market with slow funding, it’s too dangerous to play the growth-without-profits game. That’s a sure way to get the media attention no entrepreneur ever wants: that their overhyped startup is closing up shop.

3. Their competitors are boring.

If you think something is boring, you’re making an excuse. Blenders don’t exactly energize an audience, but that didn’t stop Blendtec from developing a popular YouTube channel around their product. They put all kinds of unusual objects in their blenders to demonstrate their blending prowess, and amassed 878,000 subscribers in the process.

Other blender company executives were likely sitting in the boardroom hung up on how boring their industry is. Blendtec took its own “boring” product and made it into something for people to talk about.

If you operate a business in a boring industry, it only means you have more room to be unique and make noise. Your competitors can’t think this way because they hold limiting beliefs that make it impossible.

4. Boring businesses are recession-resistant.

This varies depending on the industry, but I’ve found that “boring” companies tend to do better in times of global financial downturn. “Sexy” companies offer non-essential products and services that people still crave, but boring businesses fill a need that people will require no matter what the economy does.

5. They’re ripe for acquisition.

Some entrepreneurs love building from the ground up, but I prefer buying companies whenever possible. If you’re trying to buy a startup that’s been operating on puffed-up VC valuations without any focus on profitability, valuations can defy logic. But the people who own boring businesses are much more likely to be seeking an exit on straightforward terms that are actually based on cash flow.

To be clear, I do not believe that this growth- and hype-centered way of doing business is wrong. There will always be a need for entrepreneurs to pursue big, risky goals. But I want entrepreneurs to stop and think about which camp they want to inhabit. Both offer a set of pros and cons worth thoughtful consideration.

Different entrepreneurs have different goals, but every business wants to make profit. There are many different versions of “making it,” but if you want to lead a successful business, that “it” better be profit.

 

Dan Abatte is one of the co-founders of 81-c, a company that’s pioneering entrepreneurship as an asset class enabling anyone in the world to invest in businesses that would typically never be available to the public. Dan is an entrepreneur, thought leader, and investor with a career-long focus in business process automation through the use of advanced technology and organizational development and improvement.

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