How do you view the world? Have you ever stepped back and asked yourself if your outlook is correct? You might be wondering, “How can you measure that?” Well, you can’t because we all have a particular way of viewing the world, which is based off of genetics, personal experience, economic status, political/religious preference, education, and a slew of other factors. But, you can assess whether your perspective is effectively contributing to achieving your goals.
We’ve all been told that when one approach is repeatedly not working, it’s time to try something else. The same goes for perspectives. Sometimes, problem solving is as simple as looking at things in a different way. After countless attempts, a goal may seem unachievable—and that is when it’s time to flip your outlook.
As business owners, it’s been ingrained in our brains that planning, budgeting, and expertise are key to success. However, a recent shift in perspective led me to the conclusion that they actually aren’t that important as we were once taught to believe. Let me give you an example:
Last month, I received and invested in four new issues and profited from all four. One even doubled in a day. They were from different industries, but all related to technology in some way. The most interesting aspect was that they all lost significant money, but the losses are mostly growing. This made me take note of the fact that many new businesses seem more focused on sales growth and potential rather than targeting profitability. Amazon is a perfect example of this, as it was viewed for many years as the poster child for growth and losses. Now, companies like Uber and Wayfair are trying to emulate that model.
This trend clearly illustrates how traditional methods of planning and forecasting businesses are dramatically changing in nature and diversity. We’re used to the notion that traditional small businesses need to show profitability in order to pay bills and find investors. But, the reality for many new businesses (such as apps, sharing sites, and innovative technologies) is the requirement to prove their concept’s worth through larger scale, bigger investments, and exponential growth/losses over several years. Additionally, forecasts of these larger entities are generally meaningless and inaccurate because of the risk and uncertainty.
With all of that in mind, it’s easy to see how, when it comes to setting goals, venture capitalist firms strive for potential 100 million-plus entities while the small entrepreneur is often pleased with a million-dollar entity that makes 10% profit. Each person’s perspective is informed by their circumstances, needs, and perceived capabilities. Some entrepreneurs are just out of college, living at home, and may have a somewhat unrealistic view of life. Others are seasoned venture capitalists or investors (think Shark Tank judge) looking for the next billion-dollar deal. And then there are business owners in their 30’s or 40’s with extensive expertise and experience who need to make a living quickly. With very distinct backgrounds and needs, each of these individuals will come up with a unique plan of action to achieve their goals and a strategy for assessing risk, competition, market size and growth, resources, experience, and expertise.
Circumstance informs goal setting and perspective makes or breaks whether those goals are achieved. Consider the following:
- The Kaufmann Foundation, a group that promotes business growth, estimates there are about 400,000 new startups every year and that 90% of them will fail before their fifth year.
- There are an estimated 131 startup companies that have achieved over $1 billion of valuation in the last few years.
Thus, in roughly five years, the odds are about 1 in 15,000 that a company will reach $1 billion in valuation, and 1 in 10 (mostly small companies) will survive five years. There are, of course, significant variations in these outcomes. For example, small companies often get bought or sold and many large companies succeed, but have less than $1 billion valuations.
Also noteworthy is the fact that most of the billion-dollar companies achieved exponential growth, but also lost money over several years. For example, Uber, though a leader in startups, lost over $5 billion in the last quarter. Compounding the issue is that early investors were paid $4 billion in that quarter which further complicates the situation. Similarly, nearly every new large startup shows a dramatic increase in sales, but even more dramatic losses.
The takeaway, perhaps, is that, with this knowledge, goal setting might benefit from a shift in perspective. Rather than implementing a strategy that targets outcome, an approach that focuses on immediate results may be more beneficial. The point is: the times are changing and what once worked won’t work forever.
Things to keep in mind:
- Know your goals, resources, and risk. In particular, really understand your market analysis, competition, and how and why your company is different. Why should customers care? If you can’t answer this question, shift your perspective and look at your company through the eyes of a customer or a competitor.
- For small business owners, it’s crucial to consider proper planning, adequate research, business excellence, and well-executed programs. Ensuring profit is critical to being in the 10% that succeed. It’s also important to recognize when any of these areas are failing. For instance, if you’re having problems with planning, consider a different outlook. You may be looking at the issue with blinders on. As previously stated, problems are often solved by simply stepping outside of your traditional way of thinking and assessing the situation from a different perspective.
- If you require exponential growth to ultimately succeed, you still need to understand metrics. No matter the size of your business, know the risk and uncertainty, develop the resources, assess the ultimate market, and ensure there is at least a potentially profitable metric down the road. Is cash flow relevant and when?
A plan of action for an unrealistic goal will look impossible while a plan of action for an achievable goal may seem daunting, but doable. Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds. This combination has been the key to client success. His book, “Passion and Reality for Small Business Success,” is available at www.startupconnection.net.