Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 25: goals and benchmarks and effective development and communication of them 5

Posted in startups, strategy and planning by Timothy Platt on November 7, 2016

This is my 25th 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 and its Page 4 continuation, postings 499 and loosely following for Parts 1-24.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I offered a more abstract discussion of goals and priorities, and of performance benchmarks as reality checks in Part 24, focusing there on the earliest development stages of a new business venture when its overall financial position is still going to be very limited. I intentionally overlooked the possibility of outside financial support there, as might for example be provided by an angel investor and I continue to do so here, and for some very significant and even crucially important reasons:

• If you attempt to build a business without effective, carefully thought out financials planning and without the decision making rigor that it demands, your chances of succeeding at that venture are going to be very low – depending more on you’re being lucky than on you’re being effective.
• And securing outside funding is not going to help you avoid this reality; even larger-scale venture capital support has very real limits and a lack of fiscal control in your decision making and business development and expenditures processes will simply mean you’re burning through all available funds and much more quickly than you would expect.
• And if you are not carefully thinking through and managing your new venture here, I can essentially guarantee that that last bullet point’s “more quickly than you would expect” will occur too.
• See my here-very relevant and closely related series: Understanding and Navigating Burn Rate: a startup primer, as can be found at Startups and Early Stage Businesses, as postings 67-78 for a fuller discussion of the what and how details of this.

At the end of Part 24, I said that I would take its line of discussion out of the abstract, by way of a more specific real-world example. And I will at least begin to do so here with a selective discussion of the initial founding and first steps of a specific web portal/retail outlet startup that I briefly worked with a number of years ago, that got some early details very right, but that made some real mistakes there too – and that had to go through learning curves to even know when a longer-term consequential decision was more likely to lead to success or to problems.

• That basic new business and learning curve description applies to essentially any and every successful startup, as well as to every eventually unsuccessful one.
• Even successful serial entrepreneurs can and do run into the new-to-them and the unexpected at least occasionally – and one of the marks of such a seasoned entrepreneur is that they are that much quicker in spotting when this is happening.
• And every new business venture and every entrepreneur who is involved in it is going to face at least some learning curve opportunities from this too, and every time.
• Ultimately, the difference between a successful new venture and an unsuccessful one can be found in which of the two possibilities predominates: details planned out successfully and those that are not – and particularly where failures in that are not picked up upon and course corrected for as quickly and effectively as possible. Successful entrepreneurs learn how to look for emerging trouble and when and how to at least begin Plan B corrections to address it, and quickly.

And this is just more abstract discussion; now let’s consider a real business – the would-be internet portal and retail venture that I just promised word on above. And I begin that by at least briefly noting three types of details that require consideration here:

1. What the founding team sought to develop as a business in general goals-oriented terms for what they would offer, and for what would competitively set them apart in this,
2. What they personally brought to the table as far as skills and experience were concerned that would support and enable this venture,
3. And at least a few details of their business plan thinking, that would help them leverage their Point 2 resources in developing a venture towards achieving their Point 1 goals.

Then after at least briefly answering questions raised by these points, I will go from there to discuss how these entrepreneurs sought to implement all of this, as a realized actual business.

And I begin with the first of these points and what these founders sought to do. First, briefly, who were the founders? The founding team consisted of a leader who provided the initial drive in launching this venture, and two of his friends. They were all information technology and more particularly internet technology oriented professionally, and they had worked together in a larger established business where they saw little opportunity for advancement, and certainly on anything like a short timeframe. They felt stultified there and blocked in being able to work creatively. And they were all ambitious and saw real potential in what they could accomplish together if they broke out on their own, where they could make the decisions and try new approaches. And their basic business goal in that was to build an online retail business that would offer novel technology oriented products that would appeal to early adaptor types such as themselves, and that they would vet and have vetted for quality and value offered. And that last detail strikes to the heart of what they sought to develop that would set them apart. Their online storefront would be accompanied by a relevant information exchange portal that focused on the types of products that they would offer, and on relevant underlining technologies that would make them work. And this portal would include both market-facing and consumer involving interactive features: social media and online review posting elements and channels, and opportunity for third party reviewers to contribute to the discussion – where this would provide these content contributors with new audiences for their postings. Reviews and assessments would come from a larger market-oriented and sourced community, and not just as within-house generated marketing for what the business happened to have in stock.

• What did these three have going for them that would offer value in this, as to skills and experience? And given the nature of their basic plans for this new venture, what other resources did they bring to the table for this?

The founding would-be CEO for this venture (Kevin), who set this effort in motion had some experience working on front-end web site technology, and a great deal more working on back-end web technology and database systems. His hands-on expertise was on building a portal and e-commerce web site, with the supporting technology that would be required, or at least large parts of that.

One of his colleagues in this (Bill) had several years experience setting up and managing online social media-oriented sites. This meant using pre-developed and off the shelf tools for setting up and managing bulletin boards and chat rooms, and he had some experience with tools for managing systems of social networking profile pages and social media-supported online groups. Crucially, this also meant a measure of experience monitoring what was being posted and shared, to identify and weed out spam and scams and otherwise inappropriate content (e.g. material from online trolls and the like.)

And the third of this founding group (James) had a networking technology background and particularly for managing servers and local area networks. And he had directly managed budgets for at least some of the projects that he was involved in, which he had led.

None of these professionals had real depth of prior management experience but they knew that – including James, at least as these three got going and began facing real decision making questions in establishing this new business. Their direct experience was more hands-on in actually building and maintaining systems and their component parts. And in this, they did have experience with some of the key technologies that would have to be deployed and used to make their venture work. They knew they did not know everything needed in building or running a business and were willing to learn, and to reach out for help. And ultimately, that became one of their strongest assets in this venture. And that detail in how I address Point 2 here, feeds directly into how I will address Point 3.

I am going to continue this discussion in a next series installment, beginning with the above Point 3. And I will continue from there by selectively discussing how their general thinking as to what they would do, was turned into practical implementation and actual business building – including a collision with a need for a real, detailed business plan. And in anticipation of that discussion to come, I also specifically note how their reaching out for help included reaching out to bring someone with solid financial skills into their team as that gap in their pool of skills and expertise became apparent. 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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