What is success? It’s abstract, really. For some, it could be money and status. For others, it’s finding happiness. In business, we tend to measure success starting with profit.
In talking to entrepreneurs, I am always fascinated with the different perspectives of success. In general, they believe their ideas are incredible and the obstacles they need to overcome are constraints like finance, resources, marketing, and competition.
I argue that their potential barriers are actually achieving excellence in developing and executing great programs. Why do I think this? Well, 90% of new businesses fail withing five years, and that includes IPOs and venture capital efforts.
Consequently, there are several issues that need to be addressed in order for entrepreneurs to reach their full potential. When an entrepreneur thinks about starting a business, there are two distinct concepts that pop up time and again: Passion and Reality. These are both critical to success.
Passion was best described by Steve Jobs when he said, “Because the people who are crazy enough to think they can change the world are the ones who do.”
Reality is understanding the problems, limitations, and constraints associated with any undertaking. As Thomas Edison said, “A vision without execution is hallucination.” Passion is what gives us the drive to overcome these obstacles. It is the excitement and energy that drive a start-up. It is crucial to balance these two concepts if you want to execute a successful business.
You also need more than a good idea—they’re a dime a dozen. Your best friend might have the next million-dollar App idea. Ideas are great as they are the true engines of innovation. However, an entrepreneur needs to determine whether they can execute the idea and, ultimately, make enough sales to earn a profit. New businesses frequently fail because small (yet critical) issues are overlooked.
Here are some recommendations to help increase potential:
Plan smartly. Think of planning as a long arduous test with lots of work, incorrect assumptions, and missing analysis. For example, 2022 financial markets haveclearly made prior economic and financial assumptions in any plan highly uncertain. The solution is to make plans simple, flexible, and solely for the entrepreneur and not outside parties. It should be a guide, not a fixed template.
Keep plans current and active. A business plan is not a document to be stored on a shelf; it should establish parameters and be developed, tested, and continuously revised. Even with a “perfect” business plan, there will be hiccups and failures along the way.
Learn from failures. This is a critical component of the ongoing planning process.
Focus on passion. This will keep you going through the failures. Additionally, a successful business plan should express why you think the business is a good idea and why it will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.
Set realistic goals. While time frames, levels, and processes can vary, you need a plan to show profitability: the when and the how. You may do what you do for a number of reasons (passion, fun, fulfillment), but at the end of the day, a business needs to make money if it’s going to last. Make sure that you set your passion aside for a moment and make sure you’re on the path to profitability. What resources do you have and need? Many entrepreneurs follow guides related to large venture capital ideas while most small businesses earn less than $1 million per year. Be pragmatic in these matters.
Take risks. This is a critical part of every entrepreneurial win. Frankly, I think we all need more of it. We tend to think of risk as a taboo concept and it’s really not—once you understand it. In order to benefit from risk, you need to define what risk is to you. Some people view risk as the potential for harm or hazard (think bungee jumping). I view risk as an uncertain circumstance in which one manages to maximize the gains. But, how do accomplish this?
Utilize analytics. More analytics in sports is creating opportunities to assess strengths/weaknesses and create new winning strategies. It has enabled athletes to take more three-point shots, hit more home runs, longer golf drives, and score more touchdowns. More knowledge = more informed decision = less risk.
Consider value and probability. These should inform your goals and processes. For example, winning the lottery has an extremely high reward, but also has low probability. Purchasing investment bonds has lower return than buying stocks, but the risk and volatility of buying stocks is higher.
Be flexible. There are a lot of moving pieces involved in a business plan. And curve balls are inevitable as our world is constantly changing.
Remember it’s an ongoing process. It takes time, dedication, and consistent effort. Peloton, which was one of the hottest companies in the country, recently experienced over a 25% decline in sales. So, we need to constantly compare goals, risk, and the potential of alternatives.
Listen to your gut. Sometimes you just have to go for it. We tend to overthink things or let fear stop us from challenging the status quo. But, if your intuition is telling you something, it’s usually worth listening.
Just as there is no single definition of success, there isn’t a certain path to achieve it either. But, you can set yourself up to increase your chances by creating clear goals and understand the risk, the rewards, and the importance of developing a smart business plan. And don’t forget your passion—the reason you started your business in the first place. Success isn’t fun if you’re not enjoying what you’re doing.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
Just go for it? Really? Yes, really. Sometimes you need to downplay cautions, history, probabilities, and all the other excuses standing in your way. There will always be reasons to hesitate on any decision, but the bottom line is: You can prepare all you want, but you’ll never be 100% prepared.
While observing organizations, I consistently find that while skills, finance resources, competition, marketing, and operations are critical, it’s actually the intangibles that often make the difference. For example, culture, expectations, and excellence greatly affect success more than we acknowledge.
The world is and will always be ever-changing. So, we should accept more uncertainty and take more chances. Jobs, Bezos, Gates, Zuckerberg, etc. all took incredible risk in order to succeed. Should you go for it? Consider this example of alternatives:
Accepting a $100,000/year job with reasonable certainty of continuity versus embarking on an entrepreneurial venture with the potential of being a multi-millionaire and achieving your dream career. If you’re considering the practical probabilities, risks, and potential of these choices, you’ve ignored the argument to go with your intuition, gut, and passion. And so many of us ignore these things naturally because we were taught to analyze excessively and rely heavily on numbers and statistics. But, in many cases, knowing and calculating an expected value actually has more traps than virtue. For instance, you limit yourself by relying on a projected number and, therefore, may disregard solutions and strategies that could have even greater potential.
It is my belief that we don’t choose passion enough. However, there are several factors that actually make the entrepreneurial path more desirable: 1) you can take a job any time 2) you’ll gain great experience from the entrepreneurial endeavor 3) you’ll probably suffer fewer losses than expected. For example, most young people will experience several jobs changes before they’re 30 anyway… So, why not take some risk pursuing a dream? Go for it!
Passion also acts as an important incentive, which can result in success. Don’t underestimate it! Many experts argue that we achieve only a small portion of our potential because we’re stuck in boring, unsatisfying, and dead-end positions. I have many colleagues who remain in dying industries (like retail) and have suffered for years. They’re stuck in declining companies that have failed to adapt to emerging trends like E-commerce, logistics, and operations. But, what could we achieve if we were able to escape those soul-sucking jobs? As Sheryl Sandberg said, “Consider what you would do if you weren’t afraid.”
So, you’ve decided to “Go For It.” Now what?
Establish successful parameters. We frequently underestimate our denial and overestimate perceived barriers. For example, the pandemic is clearly changing parameters and we need to adapt rather than wait for things to return to the way they were. The entertainment industry, energy companies, work at home options, and urban real estate are all areas that are undergoing dramatic change and will permanently alter the economy as well as our lifestyles. Additionally, technology, E-commerce, productivity improvements, and Zoom are opening the door for more opportunities. Use these changes to your advantage.
Consider social factors. Income inequality, partisanship, racial equality, and diversity are among the social topics that are changing our culture, practices, and awareness. Similarly, the aging and minority populations in our country are creating dramatic shifts in our society. We simply spend too much time on partisan arguments about these issues rather than developing solutions and maximizing opportunities.
Encourage positive change. For example, women are fighting for equal opportunities and treatment. This requires some much-needed cultural adjustments as well as some operational changes like creating proportional bathrooms in sports stadiums. Additionally, working from home is enabling many parents to fill both work and parent duties. An important and needed change is actively recognizing that women have been held back and working to maximize their potential.
Accept failure. (But, don’t quit!) Mistakes are inevitable. Edison may have said it best, “Many of life’s failures are people who did not realize how close they were to success when they gave up.”
Look for the positive and be the positive. We’ve all felt what it’s like to work with/around negative people—their energy sucks everyone else down to their level. We feed off of those around us. Create an atmosphere where everyone lifts one another up. When a problem arises, work together to find a solution. When mistakes happen, look for the lesson to be learned and grow. Everyone will be better for it. A structure that focuses on learning from mistakes will always be more equipped to deal with them when they arise.
Support risk taking. If we know we have support, we are more likely to take (appropriate) risks, which can lead to innovation. When people are afraid, they can’t perform to their full potential. Fear is one of the leading factors that holds us back and prevents us from trying new things.
Focus on collaboration. Make sure the organization has the resources it needs to succeed. That may mean providing additional training, one-on-one feedback, updated equipment/software, or extending deadlines. Understand your organization’s needs and let employees know that they can rely on you to back them up.
Treat people equally and individually. This might sound contradictory, but it simply means that, while everyone should be treated fairly and equally, each person’s individual needs must also be taken into consideration. Some might require more supervision or verbal encouragement while others thrive being left with complete autonomy on a project.
“Going for it” does require a different perspective—you must look to the future and not the past. Here are three different examples that illustrate this idea: 1) Wayne Gretzky was a great hockey player who revolutionized the game. One of his contributions was Gretzky’s rule, which states that you skate to where the puck is about to go, rather than where it’s been. 2) Xerox developed the personal computer in the 1970s, but dropped it when they didn’t see any future. Steve Jobs, who bought the technology for almost nothing, toured the facility in 1979 and presumably hopped around and yelled, “What is going on here? You’re sitting on a gold mine! Why aren’t you doing something with this technology? You could change the world!” 3) Prior to Jobs’ revelation, Moore’s Law was created, which states that operating circuits could double their performance every year. That forecast (which was true for decades) allowed the computer industry to shrink all its components and increase performance annually to plan for new developments on the basis of that expectation.
Think about this: What’s the point of a band covering a song if they don’t change it up and put their own spin on it? So, I suggest: Look at what is, but find a way to see beyond that and run with it. Robert Kennedy’s paraphrasing of a George Bernard Shaw quote is quite fitting: “There are those that look at things the way they are, and ask why? I dream of things that never were, and ask why not?” And I ask: Which will you be?
Dr. Bert Shlensky, president of Startup Connection (www.startupconection.net) is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business as well as the President & CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
Creating a business plan is a lot like forecasting the weather… those who are in charge of predicting a storm get blamed if they are not 100% accurate. The same logic applies to business planning in terms of timing, expediency, and execution. This can lead many business owners to abandon ship, rather than seeing it as an opportunity to change course. Always remember, business planning is a process.
Carl Schram, former head of the Kauffman Foundation for Entrepreneurship, recently wrote Burn the Business Plan, which echoes a similar strategy for a streamlining the planning process. Reis and Schram are mostly right to criticize excessively lengthy business plans. At Startup Connection, we argue that business plans are necessary, but that they need to flexible and dynamic (and meant primarily for yourself, not others.) As the saying goes, “If you don’t know where you are going, any road will get you there.” Making plans for others (especially venture capital firms) and following specific rules almost guarantees the process will not be useful to you. In addition, venture capital firms account for a very small segment of business financing, especially in the beginning. A business plan is not just a document to be stored on a shelf; it should establish parameters and be developed, tested, and be continuously revised. Even with a “perfect” business plan, there will be failures along the way. In particular, failing and learning from failure are critical components of the ongoing planning process. Business planning is a process.
Some Planning Suggestions
There is no cookie-cutter approach to writing a business plan. Get your ideas on paper before stressing about the organization of information. Don’t stifle yourself. Write it in your own words, as simply and concisely as possible.
Focus on your passion. A successful business plan should express why you think your business is a good idea and why you will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.
Common Parts of a Business Plan
Every business plan is different because every business is different. However, there are some common elements to consider, such as:
Mission statement
Goals
A description of products and services
Ideal customer
Analysis of the industry and your competitors
Marketing and sales tactics
Operational plans
Manufacturing and delivery logistics
Resources necessary (this includes labor, equipment, and facilities)
Financial budget
Also, focus on the components that are most important and challenging, rather than worrying about making every section perfect.
Some Further Tips
Don’t be too verbose: A formal business plan must focus on the needs of the audience and the entrepreneur. Business plans must be on point and clear. Typically, plans should be 15-30 pages. If additional details are required, put them in a short appendix.
Think it through: You might have a great idea, but have you carefully mapped out the steps you’ll need to make the business a reality? It’s worth investing your time in the planning phase to ensure you might make money in the long run.
Do your research: Investigate everything you can about your proposed business. Google and Amazon are great and easy tools to understand the market and your competition.
Be realistic about your competition: Is your product or service something people really want or need, or is it just “cool?” Why do you think people will buy your product or service?
Get feedback: Obtain as much feedback as you can from trusted friends, colleagues, nonprofit organizations, and potential investors or lenders. You’ll know when you’re done when you’ve heard the same questions and criticisms again and again. The goal is to have a good answer to almost everything that can be thrown at you.
Completing the business planning process can be challenging, but it should also be interesting, productive, and satisfying. The hardest part is developing a clear picture of the business that makes sense, is appealing to others, and provides a reasonable road map for the future. Another challenging aspect is integrating your products, services, customers, marketing, operations, management, and financial projections seamlessly together. However, these pieces should not dilute your enthusiasm to succeed.
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at MIT. He served as the president of West Point Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start-up companies and small businesses. Call today for a free consultation, so we can use our business plan templates to take your business to the next level.
Did you know that being dead cheap could be dead wrong for your business? Many small businesses try to be the cheapest, thinking that it’s a certain way to make more sales – but pricing does not work that way.
If your pricing strategy doesn’t go beyond being cheap, you’re at risk!
Consider how Uber prices its rides. Uber originally tried out just being the cheapest all the time. It didn’t work – drivers didn’t want to work for so little money at inconvenient times like late nights, Saturday nights, or holidays. Guess when demand for Uber cars is the greatest (you can read all about this on an Uber blog)? So, Uber created a dynamic pricing strategy linked to demand, as well as a lot of other factors, and it worked brilliantly.
Learn Dynamic Pricing!
Today, most companies use a dynamic pricing model. These can range from the ”early bird special” to sophisticated algorithms, like Amazon. Try being cheaper than them, and they’ll find a way to reduce their prices further than you can, at just the right times.
Because, it’s not all about price. Consumers look at price as one factor among many. The consumer thinks about quality, usability, overall value, look, and feel, along with a number of other aspects – each product has a different combination of consumer-appeal factors.
For many products, price isn’t at all the main aspect involved in consumer choice in evaluating the total value of a purchase. Here’s an example from the Harvard Business Review: “Some products have a much more immediate and dramatic response to price changes, usually because they’re considered nice-to-have, or non-essential, or because there are many substitutes available. Take, for example, beef. When the price dramatically increases, demand may go way down because people can easily substitute chicken or pork.”
More complicated products have more factors to consider; keep in mind that “price elasticity” – the technical term — isn’t just a factor of how well you’re marketing. It is also affected by the type of product you’re selling, the income of your target consumers, the health of the economy, and what your competitors are doing. “You can’t look at it in isolation; you have to look at it in context of the industry and its competitive structure and in the context of consumers’ lives,” as the HBR article explains.
Getting the Price Right
To get pricing right, it must be a part of integrated marketing programs that also consider product, service, quality, competition, price elasticity, and internet channels – each product calls for a selective strategy.
As part of your overall analysis, there are some pricing tactics you might consider:
FREEMIUM is one of the most powerful pricing strategies today. Promotions are incredibly effective and, contrary to popular belief, they don’t hurt your image or make you seem cheap. Google, Facebook, the cloud, public organizations, and open source programming all give things away to build their long-term success. What makes freemium so effective is that it builds trust with customers. You give away something of genuine worth, and then the customer believes that you deal in products with inherent value. Gaining customer trust is the most powerful form of marketing.
Drop High Maintenance Goods: You need to get customer reaction to your products, so that you can learn which ones the consumers say have high customer service and maintenance attached. Get rid of products that customers have had bad experiences with – this enables you to concentrate on popular ones for which you may be able to earn higher margins. Drop the unprofitable lines and find out what customers don’t want – this will help you to put together a clear pricing strategy.
Selling exclusive products and services is another tactic to keep prices and margins higher. You can’t be beaten down by the competition if they don’t really have the product you can offer. Exclusivity is not necessarily just the simple product. It can be quality, service, or just a simple understanding of your needs. Psychological Pricing: Base your prices on factors such as perception of product quality, popular price points, and what the consumer perceives to be a fair value. This pricing relies on a positive psychological impact on the customer.
The key factor in all of this is the value you offer your customers, and this is why building trust combined with pricing psychology are powerful tools. Your customers perceive a value in what you offer in terms of its intrinsic value, and the effects of the product on their lives – i.e. buying a takeaway meal provides good food, but also saves the consumer time in preparation.
Taking all of the pricing factors into account isn’t easy. That’s why we, at StartupConnection, can help you understand how to go about it.
Why don’t you contact us and let us help you to have an effective pricing strategy?
Dr. Bert Shlensky, president of StartupConnection ( www.startupconection.net ) is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start up and small businesses.
Businesses talk about creating an environment that encourages innovation, change, openness, and so on. They believe that getting employees motivated with some good ol’ “rah rah” enthusiasm will make their workers feel good and inspire them to be more productive and innovative. They couldn’t be more wrong. You need to learn to think outside the box.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
Creating a business plan is a lot like forecasting the weather… those who are in charge of predicting a storm get blamed if they are not 100% accurate. The same logic applies to business planning in terms of timing, expediency, and execution. This can lead many business owners to abandon ship, rather than seeing it as an opportunity to change course. Always remember, business planning is a process.
Common Parts of a Business Plan
Did you know that being dead cheap could be dead wrong for your business? Many small businesses try to be the cheapest, thinking that it’s a certain way to make more sales – but pricing does not work that way.