Business Variables are the Same

It is natural to think of your new startup as being unique.? You may be addressing a problem that has not been addressed before. You may have a different approach or be addressing a different market segment.? Whatever it is, to stand out from the crowd, you need to offer a sustainable differentiator.? Aside from the one or two differences, you will quickly discover that you have to address virtually all of the same issues as every other company independent of their product or service offering, market segment, or region.? Said another way, the success equation is always the same; all of the variables are always present.? The only difference is the coefficients of the variables and how they change over time.? Using a less mathematical explanation: Every company needs to spend time and energy in a number of areas in order to be successful.? The amount of time and the amount of energy will vary but all of the areas need to be addressed.? Further, the time and energy that needs to be expended will vary from one company to the next.

As an example, a high tech company that is focused on bringing a new product to the market probably needs to invest heavily on the product’s development efforts long before it begins its marketing and sales efforts.? A company that is developing a web-based Software as a Service offering needs to spend time on remote customer service and automated billing that will be available as soon as the service is launched.? Ideally, a company should be able to address all issues simultaneously as they are needed.? A good example of this is Apple.? They have mastered the process of launching new products.? Obviously, a startup does not have the financial or personnel resources to match Apple, which is the most valuable company on the planet.? So, startups must carefully plan the timing and allocation of resources necessary to cover all of the bases.? It may sound scary, but startups have to address virtually all of the same areas that Apple has to address in running their business.? Comparing your company to Apple may seem very depressing.? For example, according to an episode of the television show 60 Minutes, Apple has 800 people working on the just iPhone camera!? Perhaps when your startup grows to be a multi-national, multi-billion dollar company you too will have 800 people working on one aspect of your product.? For now, it might be more appropriate to have one or two people working on a number of different aspects of your product.

Even though you are not a giant corporation with seemingly unlimited resources you cannot neglect all of the variables in the success equation.? What you can do and what you must do is prioritize the activities and decide when to address each activity and with what level of resources you need to apply.? Ignoring them won’t make the issues go away.? At the earliest possible time, consciously think about the various activities that will need to be addressed.? For example:

·?????? Accounting

·?????? Legal

·?????? Advertising

·?????? Manufacturing

·?????? Customer Service

·?????? Marketing

·?????? Development

·?????? Order Fulfillment

·?????? Distribution

·?????? Public Relations

·?????? Finance

·?????? Quality

·?????? Human Capital

·?????? Sales

When reviewing these activities consider the following:

1.Determine the start time by forecasting when the activity will be required and how much lead time is necessary to develop it.

2.Consider if stop gap or interim solutions can be used to reduce the effort and costs.? For example, initially using Excel? to track the first several customers and their issues, may be effective until the business volume justifies the implementation a CRM system.

3.Leverage other assets by hiring part-time or outsourced services.? Fractional CFOs, marketing experts, design and development companies, and, of course, law firms are available with highly skilled individuals that can be retained on an as-needed basis.

4.Hire people that have experience in multiple areas and clearly communicate to them that they will have to do double or triple duty until the organization can support additional resources.

5.Last, but most importantly, hire only individuals that are willing to be individual contributors and “get their hands dirty”.? Many of these individuals will be asked to perform tasks that they did ten or more years ago.? During the company’s early growth stages, full time managers are simply a luxury that the company cannot afford.

In another article in this collection, “CEO Means Chief Everything Officer”, the notion that you, the entrepreneur, need to think about and be responsible for virtually every aspect of the business is discussed.? Going through the planning exercise described above will allow you to prioritize your activities and add order to your plans.? You will certainly need it!

?By: Tom Berger