Choices

Building something new is hard – incredibly hard!  A cascade of choices that align into a structure that ultimately succeeds or fails is the essence of business building. And, for sure, this is also the fun part that attracts innovative entrepreneurs!

Overall, the process of building a successful company demands an open learning mindset, the ability to envision what a future organization looks like and make trade-off choices on how to get there, and the willingness to creatively revise all plans along the way. It’s all about choices and often involves hard decision-making. Are you ready and willing to make the calls that make the difference between success and failure when you have only some of the information and clarity you wish you had?

Learning

Figuring out the way forward each day when building a startup means constantly gathering new information, assessing its implications and potential impact on your plans, and then deciding which path to take. The moment you stop learning is the moment you start to stagnate. Here are some examples of areas to focus on when learning:

• Customer Needs: Identifying your customers and figuring out what they need is foundational. This process demands asking relevant questions, listening with empathy, discerning where the gaps are, and what the most important characteristics of an appealing solution are.
  
  
• Competitive Landscape, Competitive Positioning and Business Model: When solving the problem you are targeting, what alternatives do your potential customers consider?  Even if it is “no solution” (status quo), those are your competitors!  Competing solutions exist in the customer’s mind. Now, what are the implications for your business? Remember that making a “me, too” product or service pushes you toward competing with a likely established competitor by offering a lower price, a broader set of benefits, or some other differentiator. If you have some creative solution, you can maybe offer something that is better, faster, or cheaper than what is currently available. The best thing about picking this road is that the competitive sales are relatively straightforward since the customers already use widget A to solve their problem so if you can give them a widget B that is materially better on some dimension, you may be able to peel off some customers. This is often a scenario that works out well for retail solutions, where location and hours can be key competitive advantages.  Think of it this way, how is it that there are over 13,000 McDonald’s in the United States? They pretty much deliver the same array of products, and their customers choose which one to visit based on convenience. Do you want to compete on convenience?  If so, maybe pursue a career as a franchise!
  
  If instead you want to solve a nagging customer problem in a novel way, you have the potential to define the solution – and extract extra value by delivering a creative solution to needy customers. The challenge with this road is that you must help your customers recognize their problem and how well your solution addresses it. That inherently requires educating the market – and is often a slower path. I know what to expect from McDonald’s. I don’t know what to expect from what you created, so I have to become aware of it – and figure out if the solution is worth it to solve my problem. For entrepreneurs, this means that going deep on customers’ needs and context is essential for crafting a solution that meets the myriad dimensions of customers’ demands at a cost that makes sense to them for purchasing the new “thing.”
  
  Stage one in making choices about how you might enter the marketplace as an entrepreneur is developing a deep understanding of your target space. This is known as customer discovery. Don’t skimp on it. Be bold in finding people who would be your future customers and really learn about their point of view on the world and what it would take to move them from complacency to taking a risk on something new.
  
  
• Product Design, Operations, and Costs: In parallel with learning about customer needs, competitive landscapes, and other external factors, you also need to develop an understanding of your product design along with the associated benefits, features, and costs. An identified need without a creatively designed solution is not the basis of a business!  Figuring out how to solve that problem in a cost-effective way at scale is essential. Product design, prototyping, supply chain choices, and so on will all influence whether you can build a fully-fledged business that has a chance of becoming a profitable going concern. Make sure to work with financially knowledgeable people to capture all the funds flows so that you can convince yourselves and your potential investors of the business proposition’s viability.

Envisioning

As the pieces of the puzzle start to emerge from your learning process, you need to imagine a business that can successfully deliver to customers. What do you need to:

• Manufacture your service/product?
• Market and sell your solution?
• Deliver your service/product?
• Get paid by your customers?
• Satisfy regulatory agencies?
• Track your financial transactions and produce the financial reports that are demanded by tax authorities, investors, partners, suppliers, and banks?
• Legally establish your company?
• Recruit and manage team members of various types?
• Attract investors and manage invested capital?
• And so on…

Having the requisite business knowledge to envision how to create all the components of the business organization, with the people, processes, and technologies that you need, is essential. Basically, you need to be able to visualize what the organization will need to do and look like at various scales so that you are able to generate and execute plans to get there. You will need support from professional service providers, team members, and potentially investors. Mentors can help – and you will be drinking from a firehose in terms of learning how to do this incredibly wide range of stuff. 

Revising

Have you ever heard that no plan survives first contact? As you envision your plans, you will find that you are only planning for what you can imagine or predict will happen. As a veteran entrepreneur, I can confidently affirm that you will be surprised by the unexpected things that throw wrenches in your plans. Here are some common and not-so-common examples of the unexpected:

• Your clients take longer than you ever imagined deciding to buy – and even longer to pay you
• The “elephant” client actually says yes to buying a bunch of your product (!)
• A key supplier goes out of business or stops making that critical part
• A regulatory agency gets busy with other priorities and interminably delays taking action on your application
• Your biggest competitor puts in an order for your product
• An important team member gets sick, quits, or fails to deliver
• Your investors choose to not continue funding your next round in favor of one of their other portfolio companies
• Your product performance does not meet the actual customer need because no one ever told you about that particular requirement so you didn’t design for it – back to the drawing board!
• Someone you hired steals from you
• A competitor challenges your patent

I could go on and on, but you know the drill. The one thing you know for absolute sure is that some aspect(s) of your plans are wrong, you just don’t know which ones yet!

Remember, as Eisenhower said, plans are worthless, but planning is everything. To me that means that once a plan is “set” it is also obsolete, yet that does not absolve us of the need to plan, to develop options, to prepare and consider what we can do. The art is in creating actionable plans, executing on them well, and then revising and adapting dynamically in response to changing conditions. Avoid overplanning to far in advance, while still developing preliminary concepts of plans that you can flesh out as the time for execution draws nearer and more is known.

Success in business relies on your ability to make decisions in the fog, plans that can be evolved as you learn, and never getting stuck. If all these choices do not feel like what you love to do, perhaps another career path would be a better fit. Otherwise, rock on!