The American Dream Is Alive. But Business Owners Should Think Bigger About Growth.

There is a persistent narrative that the American Dream is fading. Opportunity is narrowing. Wealth increasingly belongs to those who were born into it. The surest path to prosperity runs through an elite university, Wall Street or Silicon Valley.

A recent Wall Street Journal essay by economists Eric Zwick and Owen Zidar makes a compelling case that the evidence tells a different story.

Their “Everywhere Millionaires” article suggests they aren't primarily tech founders or financial wizards. They are owners of restaurants, HVAC companies, auto dealerships, manufacturers, service businesses and countless other decidedly ordinary enterprises. They are building substantial wealth in communities across America, frequently without elite degrees, inherited companies or outside investors. 

Consider Dick Portillo.

He started a hot dog stand in 1963 with $1,100 and, by his own admission, didn't know how to cook a hot dog. By 2014, that business had grown into the Midwest's largest privately owned restaurant company, employing 4,000 people. He ultimately sold the company for $1 billion. 

It is an extraordinary outcome from a decidedly ordinary beginning.

And therein lies an important message for America's business owners.

The American Dream is alive. But perhaps we should think more broadly about what it means to achieve it.

Business Ownership Remains a Remarkable Engine of Opportunity

One of the most striking observations in the Journal article is that the typical path to wealth of $10 million or more comes from owning a company. And that path, the authors argue, exists in towns across America and within industries that rarely make headlines. 

That's important.

We spend a great deal of time celebrating disruption. The next technology. The next unicorn. The next industry that will supposedly change everything.

Meanwhile, millions of entrepreneurs are doing something much less glamorous.

They are fixing things. Installing things. Manufacturing things. Serving customers. Running restaurants. Building homes. Moving products. Improving processes.

The authors estimate that nearly half of America's private business equity resides in what they call “tactile, Main Street industries.” 

These businesses don't necessarily change the world.

They become better businesses.

And that’s an important distinction.

Extraordinary Businesses Are Often Built Through Ordinary Improvements

Portillo didn't invent the hot dog. He learned how to steam a bun properly.

The Journal article makes the point that much of the innovation occurring in these businesses is incremental. Owners learn something, improve something, serve customers better and then do it again. Competitors respond. Standards rise. Businesses improve. 

That probably sounds familiar to anyone who has spent much time around successful privately held businesses.

Great companies are rarely built through a single brilliant decision.

They are built through thousands of better ones.

Better processes! Better people! Better margins! Better customer retention! Better leadership! Better allocation of capital! Better execution!

Repeated year after year, those seemingly ordinary improvements can create an extraordinary asset.

At Pathfinder Group, much of our work is built around precisely that premise. Sustainable growth requires planning, strong leadership, intentional culture and better processes. The objective isn't simply getting bigger. It is building a better and more valuable business.

But that raises another question.

What’s all that growth ultimately for?

Growth in the Business

Ask most owners whether they want their companies to grow and the answer is predictable. Of course!

More revenue. More customers. More locations. More employees. More EBITDA.

Those are legitimate measures of progress.

But the harder question is what that next level of growth should look like.

Size alone can be a dangerous proxy for success.

A company can double its revenue while becoming more complicated, more leveraged and more dependent upon its owner. An owner can create an impressive income while simultaneously building a business that nobody else can operate.

For many successful owners, this is where the paradox begins. The company they spent years making successful has also become increasingly dependent upon the person who built it.

The better objective is to increase the quality and value of the enterprise.

That means growth accompanied by stronger margins, capable leadership, repeatable processes, customer diversification, financial discipline and an organization capable of performing without everything flowing through the owner.

Revenue tells us how big a business has become.

Value tells us something about what has actually been built.

Growth in the Owner

There is another form of growth that receives considerably less attention.

The owner has to grow, too.

The skills required to start a company are not necessarily the skills required to lead 50 employees. And those aren't necessarily the skills required to lead 250.

Entrepreneurs who successfully navigate those transitions eventually confront a difficult reality: some of the behaviors responsible for getting the business this far may prevent it from getting where they want it to go. Have you ever heard the phrase “what got you here, won’t get you there”?

Doing everything becomes delegation.

Knowing every customer becomes building a sales organization.

Making every important decision becomes developing other decision makers.

Managing people becomes developing leaders.

Being indispensable eventually becomes a liability.

That evolution can be difficult because it requires owners to relinquish some of the very control that helped them build the company.

But something interesting happens when they do.

The business becomes stronger while the owner's relationship with the business begins to change.

The company starts serving the owner rather than the owner perpetually serving the company.

That is growth, too.

Growth in Financial Independence

Then comes the dimension many owners postpone thinking about.

A successful business may produce substantial income and still leave its owner financially concentrated in a single asset.

The business may be valuable on paper, but until the owner understands what that value means in relation to personal goals, family, taxes, liquidity and eventual succession or transition, business wealth and financial independence are not necessarily the same thing.

Which raises a deceptively simple question:

What should the wealth created inside the business ultimately make possible outside of it?

This doesn't mean every successful owner should be preparing to sell.

Quite the opposite.

Planning creates choices.

An owner might eventually sell to a third party. Transition the company to family. Sell to management. Bring in outside capital. Retain ownership while stepping away from day-to-day operations. Or continue running the business for another 20 years.

The objective isn't exit.

The objective is optionality.

Growth Should Create Options

Perhaps that is the larger lesson buried inside the remarkable stories of America's “Everywhere Millionaires.”

The American Dream isn't simply about becoming wealthy.

Nor is entrepreneurship merely about building a bigger company.

At its best, business ownership creates something much more powerful.

Choice.

The choice to invest. The choice to grow. The choice to develop other leaders. The choice to spend less time inside the business. The choice to provide opportunities for employees and family. The choice to sell. The choice not to sell. The choice, eventually, to decide what comes next.

The American Dream remains alive because ordinary people are still building extraordinary businesses in ordinary communities across this country.

But perhaps the fullest expression of that dream isn't simply what those businesses become worth. It's what that value ultimately allows their owners to do.

That is a definition of growth worth pursuing. How do you see it?

Ready to Create More Options for Your Business and Your Future?
Let’s talk about where your business is today, where you want it to go, and what it will take to build greater value and flexibility. Schedule a conversation with Pathfinder Group.

https://calendar.app.google/oJpsr9gc6jBYzhZd6