Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 26: goals and benchmarks and effective development and communication of them 6

Posted in startups, strategy and planning by Timothy Platt on December 23, 2016

This is my 26th 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 1-25.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I began discussing a case study example in Part 25, of a web portal/retail outlet startup that sought to offer novel technology products to a primarily early adaptor market audience. And they planned on meshing an online storefront for this, with an actively interactive online presence that would serve as a crowd sourced channel for sharing reviews, feedback from experience using those types of products, and opinions. This type of community involvement, centered around the types of products that they offered through their storefront, would serve to set them apart from their competition, where they at most offer one star to five stars ratings and site visitors always wonder if any of this “consumer feedback” is even real – or if it is just misleading marketing hype. Some businesses do, in fact load fake reviews and product quality assessments into their feedback as shown on their sites, and weed out and discard any real feedback that they do not see as supportive of their interests. This venture would do this better, and in a way that could be developed into a source of consumer community strength for them.

I started this discussion in Part 25 by offering three topic points, that collectively map out much of what I would delve into in this case study, which I repeat here for continuity of discussion:

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.

I at least briefly addressed Points 1 and 2 in Part 25, and continue from there in this posting where I will turn to consider Point 3. I strongly recommend you’re reviewing that earlier series installment, to put what I add here into a more meaningful and understandable perspective. And to put this discussion in a still fuller perspective, with regard to this blog as a whole, I also note an earlier series that I developed and wrote in response to a request sent to me by a Korean entrepreneur who was mentoring younger and less experienced business entrepreneurs there, in building their own online businesses:

• Online Store, Online Market Space (as can be found at Startups and Early Stage Businesses as postings 20 and loosely following for its Parts 1-32.) My goal there was to identify and systematically discuss a range of business development and execution issues that arise when building essentially any online business – and I in fact found myself discussing a number of the issues addressed there with the business client depicted in my case study here, while working with them.

I started addressing Point 1 and the issues of what the founding team of this case study sought to do, with a brief seeming-digression into who they were and what they brought to the table (Point 2 issues.) This was in fact not a digression at all as we all tend to do, and seek to do what we can most comfortably do best and most easily – and certainly when we see that as a viable option. When you set out to build a new business venture, you are most likely to focus on what for you and your founding team, are your strongest collective skills and areas of experience and built to them. That certainly applied in this case. And I take a similar approach to Point 3 where initial planning is entered into that would serve as a road map for actual strategically planned out operational development.

• Start with as clear as possible an understanding of what you seek to build, and with a goal of staying as practical and doable as possible in that.
• And in a fundamental sense, a good business plan fleshes out this starting point, with the details of what has to be done and by whom (and with what specific areas of expertise and experience determining that), and when and (in at least general terms) how.
• And to complete the cycle here, developing a good business plan serves as a tremendously effective reality check on your initial conception of what type of business you will build and of how you will build it that would set it apart from your competitors. A good business plan helps you to more effectively iteratively refine and develop your initial starting point to make it better and more achievable – and to make it more successful as a result.

And with this noted, I begin addressing Point 3 by raising the question of who you do not have in your founding team, that you need to bring in and early, to address strategic and operational gaps in what you can do – gaps in what you know how to do and limitations in what you might know how to do but not have the time and energy to do yourself, that needs to be done and at high priority. (Here, when I use the word “you” I refer to the collective you of the developing team already in place.) I in fact anticipated this line of discussion in my end note to Part 25 where I said that I would “note how their (n.b. the three founders here) reaching out for help included reaching out to bring someone with solid financials skills into their team as that gap in their pool of skills and expertise became apparent.”

One of the three of this founding team (James) did have some experience managing budgets and he had taken some business major courses on finances while in college. But when he and his colleagues set out to build their new venture, they began to flounder where fiscal management and oversight issues came up – starting out attempting a more ad hoc approach for that and getting into trouble from doing so. It was not hard to convince them that they needed to start looking for a startup-experienced Chief Financial Officer who could help more systematically organize and run this and who would be a good fit for their team and their intended business. The challenges in this came up later, as the first three and others they brought in found themselves in disagreement with their non-founder CFO over budgets and spending priorities.

• Disagreements and even outright conflicts can and do arise and particularly where people have become personally invested in pursuing specific business development approaches that they have in some way become committed to,
• And both for what has to be done next, and with what level of commitment in achieving it. And CFO’s can easily find themselves in the sometimes quite uncomfortable position of saying “not yet”, or “… but not in that way and at that here-and-now cost”, or “no” – and in direct denial of that bought-in commitment from others on the team.

Fiscal feasibility, as an ongoing due diligence and risk management exercise is usually at least one of the strongest drivers behind the iterative process of refining the underlying business goal and the business plan, that I just made passing note of above. And this is where good, open communications skills and a willingness to compromise can be essential to success. This observation definitely applied in this case study example. (And I end this paragraph by adding a startup-oriented primer on at least generic issues that enter into following a prudent financial policy – my series: Understanding and Navigating Burn Rate as can be found at Startups and Early Stage Businesses as postings 67 and following for its Parts 1-12.)

I will end this installment with one final thought:

• One of the surest signs that you need to bring in expertise in some functional area (in the above example, a CFO) is if you find that you and your team are seemingly always having to make ad hoc and one-off decisions in some same functional area, that come back to haunt you and that limit what you are doing and even where you do know how to do it, and expertly.
• Know when you are being systematic and organized and when you are explicitly following a plan, when you are intentionally course correcting and adjusting and purposefully, and when you are just drifting into the ad hoc and one-off twilight zone.
• And use awareness of that, coupled with the scalability consideration that no one can work more than so many hours a day, or on more than so many separate tasks at once and succeed, in planning out your critical hiring and onboarding. (Think of the bullet point above this as representing emergent need and its recognition, and this one as representing simpler and more linear scaling up of some same pattern in place.)
• And prioritize according to the risk faced and the loss of efficiency created by the gaps you do identify in your developing team and for both of these basic types of scenario.

There are definite trade-offs here, and I will at least briefly discuss some of them in a next series installment. I will also at least selectively continue addressing Point 3 of the above numbered to-address list in more detail. 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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