The three previous articles in this section attempt to summarize the major issues covered in all of the articles in “Volume 3, Starting a Company”. With the very nature of summaries, lots of detailed information is left out. However, for the entrepreneur or new company CEO, these summaries can provide a quick, handy roadmap of things to think about. This article is an extension of those summaries. It also includes a number of considerations discussed in other volumes in this collection.
The idea of this article was prompted by some recent, recurring experiences. In the first half of 2018, I have met with sixty-two different entrepreneurs or private company executives. In most cases, the question of “What do I do next?” comes up. This question stems from the notion that all these people have one thing in common; they do not have to worry about having nothing to worry about! There is always something that seems to require their immediate attention. Of course, this situation can easily result in high anxiety levels and frustration; often summarized by the statement “There is not enough time to do what I have to do.”
Over the past twenty-five years, I have used a very simple technique that can be implemented in minutes which can help resolve the “what should I be doing next” issue. Before describing the technique, it may be useful to level-set the discussion with some brief comments on ten simple three word “couplets”. I use the term “couplets” to only to emphasize the fact that the two major terms in each listing are related. In some instances, they are complementary, while in other instances they are opposite. Articles that describe these items in depth can be found by using the keyword search capabilities on the CxO-Atlas website.
Revenue and Cash
These two issues should keep you up at night! Most new businesses struggle with both issues: the revenue ramp is too slow and available cash is always in short supply.
Revenue and Expenses
These two items are directly related to the two previous terms. Always remember the axiom that revenue is always delayed but expenses always occur right on time! Play “what-if” to plan for these inevitable events.
Risk versus Reward
Weigh these two factors with every decision that you make. For most entrepreneurs, who are optimistic in nature, the risks are generally underestimated while the potential rewards are overestimated.
Focus and Execution
If I were to identify two factors that determine the likelihood of success or failure of a new company, I would pick these two words. Most entrepreneurs want to “boil the ocean” and pursue every conceivable prospect. Instead, they need a laser beam focus on a narrow segment and execute a detailed plan accordingly.
Responding versus Reacting
In today’s world with near instant data available to us, it is easy to fall into the trap of attempting to react to data immediately upon receipt. Instead, it is important to first convert the so-called data into information and plan a response accordingly.
Adapt or Die
This blunt statement should be kept in mind constantly. Think of all the once successful companies that have fallen by the wayside because they did not adapt at all or in time. Plans are important, but they must be relevant in an ever-changing world.
Could versus Should
Not differentiating between what you could do and what you should do is the major cause of a company not being able to focus. This, in turn, can sow the seeds of failure. Saying “no” to potential divergent opportunities is very hard but is critical.
Flush don’t Fill
Every sales “opportunity” in a company’s sales funnel takes the company’s most precious resource: time. Remove or flush opportunities as soon as possible to avoid wasting time and effort. Better yet, be very careful to differentiate and eliminate “suspects” before they enter the sales funnel and become prospects.
Vision and Operations
Someone needs to set the direction, and someone needs to plan the route. The someone could be the same person but rarely is. This issue is directly related to the next one listed.
Strategy and Tactics
Unfortunately, many organizations treat these two issues separately. They must be considered concurrently, and every action or decision must be made considering the impacts on both. Although listed last, this is the most important concept of the ten listed couplets and forms the basis for the “What is Next” technique described below.
The “What’s Next” Technique
As described in the beginning of this article, an entrepreneur or private business is easily overwhelmed with the countless tasks that need to be performed. Prioritizing and re-prioritizing those items seems to be a constant activity, often leaving little time to actually finish any of them. By quickly answering two questions, the proverbial wheat from the shaft can be easily separated. The questions are obvious once stated but easily ignored or lost in the noise of all other potential activities. The questions are simple fill-in-the blank statements with repeated, simple, short phrase answers.
The first question is:
“In six months. we will be successful if we…”
Shoot for six to eight separate answers such as:
- We will have finished our minimal viable product (MVP).
- We will have placed our MVP with two friendly customers.
- We will have identified the key characteristics and buying motive for our most likely initial customers.
- We will have secured funding to get us through the next phase of our business.
- We will have developed a product/service roadmap with inputs from prospects and outside experts.
- We will have identified the most likely distribution method.
- We will have identified potential partners that can help us finish and place our products.
- We will have developed a financial plan with a viable recurring revenue component.
- We will have identified our most likely competitors as perceived by our prospects.
- We will understand what it will take for our customers to implement our solution.
In creating the list, don’t think too hard! The goal is to create a list of all of the factors that seem necessary to put you on the path to success. For new companies, a six-month time horizon is sufficient. As the company and its plans solidify (or think they have!) repeat the exercise for one year, and perhaps two-year time horizons.
If possible, ask others to complete their own lists. Each person should go through the exercise separately and then compare the lists. The separate list creation provides three advantages:
- Each person can think about the list on their own and jot down ideas as they come to mind. There is no need to reserve a “creative meeting time” – which never is effective.
- Items missed by one person may appear on another person’s list, making the exercise more complete.
- Different views of what constitutes success will emerge and be a good starting point for open dialogue and agreement.
After each person creates their list and before the group meeting (if one is held), each person should review each success factor on their list and then ask the second fill-in the blank question:
“The potential impediments that could prevent us from meeting this success goal are:”
Some example answers are:
- We will not have sufficient funds to…
- We are not able to develop a practical list of viable prospects in time to…
- We need access to some subject matter experts to…
- The vendor qualification process is too complicated to allow us to…
- The seasonal buying habits of our prospects do not fall within our six-month time frame to…
- The conversion process for our customers is too…
- The additional benefits of our solution may not be sufficient to…
The second exercise will provide a dose of reality. The net outcome of this overall exercise is to set the short-term strategy and simultaneously identify the tactical issues that must be addressed to meet the goals.
Once you have solidified your plan, create very short-term accountability goals. Keep them very short-term, perhaps weekly or, at least, two weeks in duration. Also, make sure that they are easily and definitely measurable. Keep in mind that monthly slips happen one day at a time!
During the six-month period, other issues will undoubtedly arise. Before “reacting” to them, review your six-month list and consciously decide to change your focus or not. To help in the potential re-prioritizing activity, review the ten couplets listed in this article. They will guide your “What is Next” plans and any changes. As you convert your “What is Next” to “Done That” results, get ready for the next six-month period. From time-to-time look back. You will be shocked at the progress you have made.
This exercise only works if you take a realistic, pragmatic approach. You must take into account the level of resources, including cash and expertise, that you have or can obtain within the period. Also, make sure you understand WHO will lead each task. Ask yourself if you are doing task X, can you also do tasks y and Z. Assuming that you will win the lottery or suddenly recruit an all-knowing guru may make the exercise easy but will result in it being a waste of time. This is no place for wish-casting. Contrary to the disclaimer made by financial institutions, past performance IS indicative of future results – unless changes are made.
There is an outstanding approach that differs from the above recommendation that is defined by Franklin Covey in the 4 Disciplines of Execution book and seminars. The fundamental concept is to concentrate on ONE wildly important goal or “WIG”. This is described as Discipline One with the other three disciplines focused on the tactical methods to reach it. Many companies and groups have successfully implemented this approach and it is highly recommended for more mature companies. This article, however, is focused on newer companies that simply must work on several activities to lay the groundwork for their company. Implicit in every WIG and with any goals developed with the technique described in this article, is the need for revenue. Other articles in this collection discuss the three revenue phases: Referenceable Revenue, Scalable Revenue, and Profitable Revenue. No matter what goals you develop and what strategy and tactics you implement, successfully moving from one revenue category to the next must be first and foremost in your mind.