By: Mark Sheffield, Principal
It’s not business as usual in 2015. Best practices for an emerging business to succeed have changed. Today’s keys to success are different, even compared to five or ten years ago. That’s because the playing field has completely changed. The business environment has utterly transformed. Here are five ways the system has changed:
First, it is easier to start a company today than any time in the past. Knowledge is a few clicks away. Second, technology is moving faster than ever. Products are easier to develop. Third, resources are easier to find. Use the internet to find people and advisors who can work remotely. Fourth, markets (even worldwide markets) are more readily accessible. Fifth, it takes less money to be successful than in the past.
2015 Sacred Cows
With this new landscape, here are three sacred cows to reexamine:
- A great idea is not the foundation for success. In the past, if you had a great idea, you created your secret sauce or filed a patent and moved ahead with confidence. Nowadays, you better count on somebody else having thought of your idea. New businesses are being formed at the fastest rate ever. In all likelihood, someone else in the world is trying to do the same thing you are. To succeed today, it’s about execution. A team that executes is the key indicator of success. How can you out-execute your inevitable competition?
- Successful fundraising doesn’t depend on finding a single deep pocket. Not many years ago, you needed a wealthy investor to put up hundreds of thousands of dollars, or a VC to invest millions to raise meaningful funds. Today, single angel investors will invest as little as $2,000 each (but more typically $20,000 and up) and pool their money into angel funds or syndicates which can supply the needed seed money. Today, some VCs are willing to invest a few hundred thousand in a start-up, when in the past most VCs were only interested in multi-million dollar minimum investments in mid-stage companies.
- Sticking to your business plan is not a formula for success. Surprisingly, there are still investors and lenders out there who insist on management following the formal business plan. That could be a recipe for failure in today’s world. Because change and unpredictability is the norm today, flexible planning is considered the best practice. Being nimble and quick trumps stubbornness. Flexibility on strategies and tactics is crucial now. Experiment on your assumptions. Learn from trial and error. Continually test your product in the marketplace. Change direction as necessary. The value of a long-term business plan is the process, the thinking it stimulates and the vision it creates. It’s the two or three month flexible plan that should drive the real action.