Start Me Up: Entrepreneurial Questions to Ask & Mistakes to Avoid
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Transcript of Start Me Up: Entrepreneurial Questions to Ask & Mistakes to Avoid
Start Me Up
Questions to Ask, Blunders to Avoid
Dan RuchmanRuchman & Associates
May 3, 2013
Objectives for Today
Get one man’s view of:
• Starting & funding a business• Avoiding the potholes• Succeeding in business
• Q&A on this or anything else
What We’ll Talk About
• Business Planning: What is it?
• What does an entrepreneur want?
• What do investors want?
What makes for Success?
• Mission• Vision and Values• Goals• People• Plans• Is that all?
Success – the Intangibles
• Desire… • Communication… • Analysis…• Focus…• Wisdom
Business Planning?
The rational analysis and understanding of your company’s place in the world, and the use of strategic and tactical techniques to ensure its survival, improve its position and attain a future vision of what the company can be.
Great Moments in Business Planning
This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.
-- Western Union internal memo 1876
Another Great Moment
We don't like their sound, and besides, guitar music is on the way out .
-- Decca Recording Company on rejecting the Beatles 1962
Types of Planning for Capital Raising
• Strategic Planning
• Operating Planning
BOTH are critical!
Strategic Planning: the essence of your Plan
• Long term• Vision, mission, values• Broad issues• Strategic imperatives• Long term goals• Broad metrics
Key Strategic Questions
• Is our technology a game-changer, or an execution play?
• What is the competitive landscape?
• Will we even need outside financing? If so, how much?
• Do we have the right mix of talent?
Strategic Planning Pitfalls
• Our technology is perfect.• Our technology is unique.• We have no competition.• The market tomorrow will be the
same as the market today.• Overly precise but insufficiently
accurate• We are recession-proof
Operating Planning
• Operationalizing the strategy• Shorter term – one year, by month• Ensure consistency with SP• Criticality of cash flow• Operational metrics• Tie the parts of org together
Key Op Planning Issues
• What sales volume can we reach? Can we reach it? Why not more?
• What is our ideal product mix?• What is our Go-to-Market strategy?• How best to spend limited resources?• Too aggressive/not aggressive enough:
The Goldilocks Balance• Coordinating across the organization
Operating Plan Pitfalls
• Product launch plans under-estimate tech complexity
• Market strategy underestimates market inertia
• Market strategy misunderstands who your buyers are or their motivations
• Misjudging the competition• Inadequate funding• Procedural/process snafus
Other Strategic and Operational Pitfalls
• Wrong metrics, or not acting• Small errors large impacts• Balancing of multiple priorities• Sudden changes in market• Understanding when accuracy &
precision are critical, when not• “For want of a nail…”
Key Elements of Plan
• Executive Summary• Market Pain and Your Solution• The Market• Your Product, Technology, Service• Your Management Team• Your Business Model• Go-to-Market Strategy• Your Pro Forma Financials
Failure to Plan . . .
. . . Is Planning to Fail.
Consequences . . .
And more consequences
And finally . . .
So To Avoid That…
• Plan your Business• Work your Plan• Think – in all ways, all venues• Be flexible• Be focused• Be passionate
In sum . . .
• Make your plan well thought-out• Make your plan reasonable• Infuse your plan with passion• Make your plan attainable• Make your plan make your
investors rabidly excited about investing in your company!
So you’ve thought long and hard about your business . . .
. . . What could go wrong?
Plenty could go wrong . . .
. . . at any point in the business’s life cycle.
Critical Mistakes
Skipping the business plan
Critical Mistakes
Insufficient Business Plan
• Weak• Insufficiently thought out• Mis-purposed plan
Critical Mistakes
If I build a better mousetrap, the world will beat a path to my door.
True… but…
Critical Mistakes
A startup is just a smaller version of a big company
Critical Mistakes
Not understanding or appreciating what marketing means.
Critical Mistakes
Not understanding your secret sauce
Critical Mistakes
Not clearly defining your business model
Critical Mistakes
Insufficient assessment of risk or planning to offset it
Critical Mistakes
Fundraising: doing it before you’re ready
Critical Mistakes
• Weak pitch to investors
• Too technical• Too verbose• Too long• Weak value prop• Poor Q&A prep or skills
No second chance!
Critical Mistakes
Too little capital
Critical Mistakes
Too much capital
Critical Mistakes
Not knowing when to seek advice
• Not getting it when needed• Getting it when not needed
Critical Mistakes
Putting too many eggs in one basket
• Fundraising• Customer base• IP• R&D
Critical Mistakes
Pennywise, pound foolish
Spending vs investing…Accounting vs planning…
Comic Relief…
The accountant . . .
The date . . .
The dinosaur . . .
Critical Mistakes
Overoptimism
• Fundraising timeline• R&D project completion• Time to launch• Sales cycle• Competition
Critical Mistakes
Metrics – none, insufficient or inappropriate
Critical Mistakes
Lack of focus
Critical Mistakes
Not listening to customers
Critical Mistakes
Compromising your ethics
Critical Mistakes
Imbalance between yin and yang
• Adversarial vs over-friendly• Sharpening the saw• Spend vs conserve
Critical Mistakes
Inability to pivot
• Personality• Ego• Inflexible org or plan
Plenty could go wrong . . .
. . . at any point in the business’s life cycle.
Avoiding the Potholes
Plan your business
Never stop thinking and planning
Avoid the Critical Mistakes
Stay flexible . . . Stay passionate
Do well
Start Me Up
Questions to Ask, Blunders to Avoid
Dan RuchmanRuchman & Associates Creative and Intelligent Solutions for Finance, Operations & Strategy. Lighting the Path to Profitability Office: 858.784.0104 [email protected]