Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 18: exit strategies, entrance strategies and significant business transitions 8

Posted in startups, strategy and planning by Timothy Platt on March 5, 2016

This is my 18th posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Business Strategy and Operations – 3, postings 499 and loosely following for Parts 1-17.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

Starting with Part 11 of this series, I have successively discussed a series of strategies through which a startup’s founders and owners could transition their new venture out of its early business stage, and into more stable profitability and growth. And my ongoing narrative throughout this flow of seven postings has followed a simple pattern in which those decision makers plan out and carry through upon specific exit strategy scenarios for this, and without complications – or at least without any significant complications in implementation that might arise from within their own ranks or in how they organize and manage their business.

Startups start with small teams at most, and in most cases that situation persists and essentially for their new venture’s entire startup phase per se, and even well into its early business development phase as it starts bringing in revenue and as it strives to achieve profitability and consistently so.

• But one of the first lessons that I learned in working with startups is that even when everyone involved can easily fit into one small room to meet and to plan and discuss,
• And even when they do physically come together for this and on a regular basis,
• Assumptions can be made that are not shared,
• Decisions can be similarly made and even carried through upon without effective communications and information sharing,
• And the resulting business systems friction can significantly come into play and shape any outcomes realized.

One of my very first postings to this blog, going live to it on October 10, 2009 was titled Maintaining a Vision While Loosening Our Grip. I wrote that with the initial founder of a very real, specific venture in mind, and at a time when counting myself as a consultant adviser, there were just five or six of us involved in this effort depending on how one part time in-house participant would be counted in. This founder had his own ideas and his own information resources that he did not readily effectively share, and even as that information and its absence from the conversation affected everyone there and the venture as a whole. He also confided in and discussed matters with one of his best friends, who was the first to come onboard in this venture besides himself, and in ways that excluded everyone else – and even when this meant making fundamental decisions in areas of the business that others were nominally going to be in charge of and that they were supposed to be responsible for.

Everyone was in that one small room and at least once a week for inclusive face to face meetings – the founder’s dining room usually and sitting around the table there. But business systems friction and its miscommunications and its business information sharing challenges was there too, and in effect as if one of this new business’ founders too. I focused in that earlier posting on the need for this initial founder to loosen his grip and to let others participate more fully in building his dream of a business into a reality. He in effect, sought to use communications access as a tool for his maintaining his grip on his dream – and even as that particular form of grip did more to strangle it than anything else.

I wrote that brief little essay in its initial form as a private communication with this founder and as part of a more specific and detailed discussion of how and why his venture was getting into trouble. This business itself was a proposed online news and information-oriented community building forum that would very intentionally seek to engage and support an underserved culturally distinct community. Open communications and information sharing were at the heart of its initial driving vision. So it is perhaps ironic that it began burdened with this particular challenge. I addressed one of the root causes of this challenge in my 2009 posting, and in my more detailed and business-specific private communications with this founder, but this discussion here offers a bit more of the context and the motivation for my offering that posting in the first place: business systems friction and its developing consequences.

• Friction happens, and essentially always. How can the founders and owners and the managers of a business best identify it and address it, and its resulting complications? That is always going to be a challenge.
• But for purposes of this posting, and this point in it I note that if it is ever going to rise to a level of significant impact in a business venture, business systems friction is going to show itself for its significance as that enterprise plans for and traverses a business transition, such as an exit strategy or an entrance strategy.
• Friction does not necessarily become inconsequential during periods of more nominal business as usual but it is certain to rise to visible significance for its overt impact during times of change, if it ever does.

I am going to continue this discussion in a next series installment where I will more systematically discuss friction in the business transition context, and both for planning for and anticipating it and its impact and for limiting its operational and strategic complications. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too and at its Page 2 continuation.

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