After building, scaling, and acquiring businesses across various industries, I’ve identified several fundamental principles that consistently underpin successful growth and acquisition strategies.
These aren’t glamorous secrets or cutting-edge tactics—they’re timeless essentials that too many entrepreneurs overlook in pursuit of the next shiny object.
Core Growth Principles
Here is a list of core growth principles.
Cash Flow is King
Let’s start with the obvious but often ignored truth: cash is king.
It doesn’t matter how impressive your revenue numbers look on paper—if you’re not generating positive cash flow, you’re building a house of cards.
Many entrepreneurs, especially in tech, get blinded by top-line revenue growth while ignoring the more crucial metric of how much cash the business is actually spinning off on a monthly basis.
Yes, it is part of the model of early-stage growth, but this myopia is particularly dangerous because it creates an illusion of success that can quickly evaporate when market conditions change.
I’ve seen countless businesses with impressive revenue numbers come crashing down because they couldn’t meet payroll or other operational expenses.
No matter how promising your business model appears, without consistent cash flow, it’s only a matter of time before reality catches up.
How much liquid capital is the operation generating after all expenses?
This figure, more than any other, will determine your business’s resilience and long-term viability.
Good People Make All the Difference
The second fundamental principle seems obvious, but is extraordinarily difficult to execute consistently: surround yourself with good people.
Whether you’re buying an existing business (in which case you need to ensure there are already good people in place) or growing a company from scratch, the quality of your team will ultimately determine your level of success.
This means over-indexing on really good hires and spending the time to get your recruitment and retention strategies right.
A mediocre hire doesn’t just perform at a mediocre level—they often drag down the performance of others and create cultural friction that can be difficult to repair.
I’ve learned this lesson repeatedly throughout my career.
At Netflix, for instance, one of their cultural tenets is “we’re not a family, we’re a sports team.”
Netflix brings in the highest quality team members, pays them top of market, and maintains high expectations for performance.
This approach might seem harsh, but it creates an environment where you never look across the office and wonder, “How does that person still work here?”
The quality of your team becomes even more critical as your business grows.
Good people, properly supported, will help your business weather storms and capitalize on opportunities that would otherwise be impossible to navigate.
Cultivate Irrational Confidence (with a Dose of Humility)
The third fundamental might seem contradictory, but it’s essential: cultivate what I call “irrational confidence” while maintaining a healthy dose of humility.
Entrepreneurship requires a certain degree of irrationality.
If you looked objectively at the statistics—nine out of ten startups fail, 50% of businesses don’t make it past year five—you might never start anything.
There’s an element of faith required, a belief that somehow you can defy the odds that say you’re likely to fail.
This irrational confidence doesn’t mean blind arrogance. It must be balanced with humility—a recognition of what you don’t know and a willingness to seek help and guidance.
But at its core, successful entrepreneurship demands that somewhat unreasonable belief that you can make it work, despite the overwhelming evidence suggesting otherwise.
I’ve seen this dynamic play out repeatedly in my own career and in observing other entrepreneurs.
Those who succeed tend to have this peculiar blend of confidence and humility—enough confidence to persist through inevitable setbacks, coupled with enough humility to adapt based on feedback and changing conditions.
Acquisition Strategy: What to Look For When Buying a Business
When searching for businesses to acquire, I’ve developed a clear framework for evaluating potential opportunities.
These criteria help separate truly promising acquisitions from those that might look good on paper but lack fundamental sustainability.
Understanding Industry Dynamics
The first thing I assess is whether a business faces headwinds or tailwinds.
This macro perspective is crucial because even the best-run company will struggle in a declining sector, while a decent operation in a growing industry often has natural advantages.
I look beyond current performance to understand longer-term trends: Is this industry expanding, contracting, or transforming?
How might technological changes, regulatory shifts, or evolving consumer preferences impact this business over the next 5–10 years?
This analysis helps separate genuinely promising opportunities from businesses that might look good on paper today but face existential challenges tomorrow.
No matter how attractive the financials appear, buying into an industry with significant headwinds creates an uphill battle from day one.
Cash Conversion Cycle
Beyond basic profitability, I pay close attention to how efficiently a business converts its operations into actual cash.
How quickly does inventory turn into sales, and sales into cash in the bank account?
A business with a lengthy cash conversion cycle—where capital remains tied up in inventory, accounts receivable, or other non-liquid assets—creates operational constraints that limit flexibility and growth potential.
Conversely, operations with rapid cash conversion provide more options and greater resilience during challenging periods.
This metric often reveals more about a business’s health than traditional profit margins alone.
Two companies might show identical profitability on paper, but the one that converts activities to cash more efficiently typically has superior long-term prospects.
Alignment with Personal Interests and Lifestyle
Will I genuinely enjoy operating this business?
This question might seem secondary to financial considerations, but it’s actually fundamental to long-term success.
I recently looked at an elevator services business that had many attractive qualities—substantial recurring revenue, regulatory requirements that ensured steady demand, and solid financials overall.
However, it also meant being okay with receiving emergency calls at 2 AM on Saturday nights when elevators might go down.
This practical reality—the specific demands a business places on its owner’s time and attention—must align with your preferences and lifestyle goals.
No matter how financially promising a business appears, if operating it makes you miserable, neither you nor the business will thrive.
Operational Involvement Required
Over the past 24 months, Twitter has spotlighted a certain class of business buyers who promote the idea that you can simply purchase a company, install a manager, and collect passive income with minimal involvement.
While some businesses can indeed operate this way, most require significant owner engagement—especially during the transition period.
My personal belief is that buyers should be willing and able to operate their acquisition for a minimum of 24 months, rolling up their sleeves and getting into the weeds of the business.
This direct involvement serves multiple purposes:
- It builds critical institutional knowledge that can’t be gained from reports and statements.
- It establishes credibility with employees, customers, and suppliers.
- It reveals improvement opportunities that might not be visible from a distance.
- It creates the foundation for eventually stepping back (if desired) with systems and people you truly trust.
Without this willingness to get directly involved, you’re likely to miss crucial nuances that could determine whether your acquisition succeeds or fails.
The Intangibles Matter
Beyond these specific criteria, I also assess less quantifiable factors:
- Team quality: Are there good people already in place who will stay post-acquisition?
- Customer concentration: Is revenue dependent on a small number of clients?
- Competitive positioning: What sustainable advantages does the business have?
- Growth potential: Are there untapped opportunities for expansion or improvement?
- Capital requirements: Will the business need significant reinvestment?
These considerations help build a comprehensive picture of not just what the business is today, but what it could become under new ownership.
Bringing It All Together
These fundamentals—prioritizing cash flow, surrounding yourself with good people, maintaining irrational confidence tempered by humility, and carefully evaluating acquisition targets—form the foundation upon which successful businesses are built and acquired.
None of these principles are particularly sexy or innovative.
They won’t make headlines or go viral. But they are the bedrock upon which sustainable growth is built.
Ignore them at your peril, or embrace them and give your business the best possible chance of long-term success.
Buying a business represents a significant commitment—not just financially, but personally.
The right acquisition should offer more than attractive numbers; it should provide a foundation for building something meaningful that aligns with your capabilities, interests, and long-term vision.
The search process involves weighing numerous factors, but the core question remains simple: Can I add value to this business while it adds value to my life?
When the answer is a resounding yes, you’ve likely found an opportunity worth pursuing.