6 Signs You’re Creating an Unsustainable Business (That You’ll Grow To Resent) | by Rachel Greenberg | Aug, 2022

My friend thinks he’s starting a news empire, but he’s building a low-ROI hamster wheel he’s starting to hate

6 signs you’re creating an unsustainable business (that you’ll grow to resent). My friend thinks he’s starting a news empire, but he’s really just building a low-ROI hamster wheel he’s starting to hate.
Photo by Ricky Kharawala on Unsplash

Most entrepreneurs build their business in phases, ranging from the “live on Ramen in your parents’ basement” stage to the panicked all-nighters to hopefully some semblance of a more comfortable, livable operation. I’ve spent more years than I’d like in the “oh crap, I’m running out of money” phase, followed by the “this business is growing and killing me in the process” period. Nonetheless, I always aimed to craft companies that could one day be scalable, sustainable, and even enjoyable — or at the very least, tolerable — to run and grow for the long-term.

A friend of mine, however, has taken a very different approach to the business he’s pouring years into. When I’ve broached the topic of building a more sustainable, lucrative, and scalable operation, he’s prematurely rejected my suggestions, asserting that his industry is “different” and requires the model and growth strategy he’s adopted. However, he’s recently started to suffer the consequences of building an unsustainable business, and it’s been negatively impacting his personal life, family, and friends. To avoid falling victim to the same fate, here are 6 signs you’re building an unsustainable business you’ll one day resent.

How would you like to wake up at 4 am every single day, spend two hours researching, and the next few creating and delivering a product or service that will make you zero dollars? How would you like to do that non-revenue-generating task for the foreseeable rest of your life? Believe it or not, that’s exactly the type of business my friend has been building — and it’s starting to wear on him.

To be clear, he doesn’t have to wake up at 4 am. He could outsource the research. He also doesn’t have to be there in-person to create and deliver the product or service; he could cultivate a team and divvy up days and tasks. Instead, he’s decided to outsource the marketing and dedicate two to four hours a day — and up to 7 hours per day on the weekends — to creating the non-revenue-generating aspects of his products and services.

When I asked this friend at what point his morning ritual would be outsourced, streamlined, or no longer a real-time daily requirement, he replied that it would be years and possibly forever. While it’s fine to pay your dues and work for free, doing so with no end in sight is perplexing to say the least.

If you create an expectation that requires you to bend over backwards just to keep your prospective customers satisfied, you may be taking an inefficient route to lead generation and monetization. If either of those aspects of your business aren’t sustainable, you’re in for a bumpy, low-ROI ride.

The daily 4 am ritual wasn’t the worst part about his current operation; what’s worse is that all of his content, products, and services are incredibly time-sensitive. Therefore, he’s creating time-sensitive products that he can’t repurpose for additional monetization in the future, while also failing to collect leads. Though he doesn’t see it this way, it looks like he’s producing on a thankless hamster wheel, building a sandcastle that dissolves back into the ocean each night.

The lesson here is simple: If you’re going to invest significant time, resources, or money into content creation, product development, or service execution, make sure you’re making the most of that investment. While you don’t have to charge for everything (there is a place for lead magnets and content marketing), you also don’t want to build fancy bridges to nowhere. It seems like that’s exactly what my friend is doing.

To some degree, most (if not all) businesses are impacted by external forces, from economic events to industry disruption to shifting customer behaviors. That said, building a business that relies entirely on external events or future predicted changes (over which you, the entrepreneur, have no control) is a risky and troubling decision, to say the least.

My friend has been building his business with the hope that one major event — entirely outside his control — will draw in the flood of interest that kicks off his outsized monetization, lead generation, and potential cash out. The problem here? That event has been delayed for months, then years, and he’s simply biding his time, working for free in the hopes that one day soon his catalyst will ignite.

In business and entrepreneurship, there are so many factors already outside of our control (the economy, competitor activity, the cost of customer acquisition, etc.); you probably don’t want to build your entire monetization strategy and success on something for which you can’t affect change.

Some people think business is a numbers game, and I don’t think they’re wrong. I do, however, think some entrepreneurs — this friend, included — are too focused on the wrong numbers. My friend believes vanity metrics like followers, likes, and views are more compelling than sales. Why? He’s convinced the numbers are needed for the credibility to start generating sales, and he’s so afraid to lose any of those “fans”, so he’s avoided anything vaguely reminiscent of lead generation, data collection, or selling.

The problem here is glaring and simple: He has no clue what quality of “fan” he’s attracting, and he’s choosing quantity over quality.

If he were simply trying to amass a large viewership on social media and strike it big with brand deals, perhaps his aversion to lead generation or sales early on would be okay. Since he’s actually trying to build a one day profitable business that monetizes its own products and services, that same logic doesn’t hold up.

The moral of this story is simple: Numbers offer valuable data, but if you don’t use that data properly, you may be letting years of audience cultivation go to waste.

If you’re playing a numbers game, let it be these numbers:

  • Lead conversion rate (what percentage of those fans may actually consider buying)
  • Customer acquisition cost (how much it costs you to turn a stranger into a sale)
  • Growth rate
  • Profit margin

Don’t deceive yourself with vanity metrics that keep you in the dark about the numbers that matter. Followers and customers are two very different things.

If you’re in the business of marketing, content creation, or entertainment, you may have heard of the strategy “surprise and delight”; though my friend’s company operates in those realms, he definitely hadn’t — and he began to suffer the consequences.

When this founder finally broached a minimal monetization effort (that gave him a startling glimpse into the stats he’d been neglecting), he was soon shocked to learn that his customer attrition was sky-high (despite the fact that they were paying less than $5 per month). When I discussed the issue with him, it became pretty apparent why:

He was giving away his best content for free, then offering a stale, predictable, frankly boring paid upgrade. By the way, it wasn’t just boring for his fair-weather fans-turned-former-customers; it was also getting boring for him.

I’m not saying that you have to reinvent the wheel when it comes to your product, service, or marketing on a weekly basis; however, varying things up can definitely benefit both you, your team, and your customers. If your business, product, or service feels stale to you, you may not be the only one feeling that way.

One universal truth about most industries is that they evolve over time; entrepreneurs and companies that choose to stagnate and resist the change may not survive all too long. My friend has unfortunately decided that his industry is different, opting to adopt the dated strategies that worked decades ago for the oldest behemoths and shirking the new ones that are replacing them with novel, unprecedented tactics. He fails to consider that those newcomers just may displace the historic titans, leaving him putting his faith in a ship that’s sinking right before his eyes.

If you’re averse to exploring or adopting new or novel methods of monetization, product or service delivery, or expansion, simply because you’re copying a model that’s worked for an aging industry for decades, you might want to take a step back and regroup. You can aspire to become the largest titan of your industry, but in most cases, it’s pretty unlikely that repeating a process that worked to get them there fifty years ago will pan out the same today. If you mimic dinosaurs, you might just go extinct yourself.

Building a successful business with longevity can’t often be accomplished by a near-sighted founder; by near-sighted I simply mean that founders should be looking years down the road, not just days, weeks, or months. Almost every obstacle my friend created or encountered that has or will hinder the scalability, sustainability, or profitability of his business is due to a disproportionate emphasis on the current and a neglect for the future.

On the contrary, entrepreneurs who aim to build long-term viable, growing companies understand that the future is all we have. If we aren’t forward-looking, bracing ourselves for changes, disruption, and optimal evolution, we may build a business today that won’t have the same appeal or viability tomorrow, next month, or next year.

Don’t just ask yourself if you can maintain the operations you’ve executed today; ask yourself how you want your business to look in two, five, or ten years. Furthermore, ask yourself how your customers may want it to look at those points. As a quick tip, if you’re already feeling that your business is boring, unsustainable, or chasing dying trends or dwindling fads, that may be the best impetus to look farther down the road and shake things up entirely.