A simple visual of attributes of Good business vs Bad business based on a snippet Codie Sanchez shared in a podcast with Shane Parrish
✅ GOOD BUSINESS
- 💰 Profitable + Cash flowing
- 🤝 Get paid upfront
- 📈 Long history of success
- 👵 Easy to explain to grandma
- ♻️ Sustainable model
- 🎯 Predictable future
❌ BAD BUSINESS
- 📉 Unprofitable
- ⏳ Pay comes after service
- 🌱 New/unproven model
- 🤔 Complex to explain
- 🎲 Uncertain future
Codie said
In my definition, good business equals profitable, cash flowing, what I call a cash-flow versus cash-suck business (so you get paid upfront for a service, not after you provide a service), sustainable (it can exist for a long time), historical (it has existed for a long time), understandable (you can explain it to grandma really easily), and you have what’s called the Lindy effect, the likelihood of the future continuing to cash-flow just as it did in the past. Those are my parameters for a good business. A bad business would be a business that is unprofitable, hard to understand, hasn’t been around for very long, and you have to provide the service before you get paid for the service. That is a business that is just much harder. That’s a harder game to win.
