6.32Finding companies with sustainable business models
1What is it?
A sustainable business sells something people will keep needing, earns profit without constant fundraising, and can adapt to change.
2Why does it exist?
You want a business likely to be bigger and more profitable in 10 years, not one that depends on a fad or a single customer.
3Practical use
Ask:
- Will people need this product in 10 years?
- Is revenue spread across many customers?
- Can it fund growth from its own cash?
- Is it at risk from technology change or regulation?
4Quick revision
- Lasting demand, diversified customers, self-funded growth.
- Watch for disruption and regulation risk.
5Knowledge check
Q1. Why is dependence on one customer risky?Show answer
Losing that customer can crush revenue.
Q2. What does self-funded growth mean?Show answer
Growing using internal cash rather than constant borrowing or issuing shares.
Q3. Name a risk to sustainability.Show answer
Technological disruption, regulation, fads.