Your Perspective Will Make or Break Your Goals

by | Sep 5, 2019 | Finance Articles

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.

Is Marketing Execution More Important than Strategy?

by | May 24, 2018 | Marketing

Many marketing guides start with developing strategy – understanding your focus and defining your brand.  I argue that execution and excellence are more important than developing vague brand and marketing strategies.  As Walt Disney said:

“Do what you do so well that they will want to see it again and bring their friends.”

While this quote may seem obvious, it has a number of implications that are frequently ignored.  For example, when I talk to marketers, they frequently discuss the latest hot trend – targeting, SEO, social media, videos, paid search, etc.  However, how we execute these strategies for our situation may be more important than the specific program.  In addition, many marketers downplay measuring the results of marketing efforts.  Now, digital marketing allows you to develop, test, measure and adapt.  You can now test various programs and strategies before making expensive commitments.  Paid search is an example where key words, offers, and links, are frequently the keys to success.  Thus, testing various alternatives can dramatically help focus a program.  However, many advocates will recommend spending thousands of dollars a month with little clue of what will work.  Similarly, many marketing programs get enamored with technology while ignoring basic execution concepts.  For example, I recently read some exciting marketing plans from a client that included videos, links, and many other details.  However, they were so focused on technology that they forgot simple things like phone numbers, e-mail addresses, and how they would help their customers.

Here are some tips related to execution in your marketing programs:

  1. Goals – What are your long-term volume and image expectations?  Are you building sales just for today, or are you seeking long term customers?  What are your organizational and financial resources?  Who is your target market?  What is your competitive positioning?  The answers to these questions can change during the marketing strategy process, and they will affect your program as you begin to execute in the real world.
  2. The Internet – It’s fast, centralized, and cost-effective. Traditional print media and many retailers are dying compared to Internet retailers like Amazon (who represent between 35-45% of internet consumer sales, and are growing at about 20% per year.)
  3. Pricing, Stock, Forecasting, and Value – Now with the ability to reach customers in remarkable ways, you must consider all of these as part of your plan.
  4. Product Expectations and Customer Service – You’re a brand.  People expect a certain kind of quality based on your target demographic, so keep that aligned with your goals.
  5. Develop, Test, Measure, Adapt – This is the scientific method for a Lean Startup Strategy, and thanks to the Internet you can do all of this really quickly.  One of the key recommendations of Eric Ries in The Lean Startup is to “test, measure, and pivot until you get it right.”
  6. Customer Retention – Satisfied customers are the best, most cost-effective way to grow a business.
  7. Traditional Advertising – While firms generally are spending less money on traditional media, it can still be an important component of good marketing (especially if your products and services lend themselves to such media).
  8. Distribution – How are you selling your products or services?  Trends in distribution are changing rapidly, and your process needs to be in sync with the times.  For example, automation and customer service are replacing the direct salesperson.  Money can be saved by eliminating traditional channels and substituting direct shipping and the Internet
  9. Integration – The key to an excellent marketing plan is to employ all of the tools you consider relevant and affordable, and to develop a targeted plan with clear action steps and benchmarks.  First and foremost, the plan must fit your goals and your budget.  It is then critical to measure the results and adjust to maximize your goals and profit.
  10. Risk and Openness – I encourage you to consider more risk in our changing environment, and I also suggest changing the business culture to encourage more risk-taking.  I often say, “If you aren’t making mistakes, you aren’t trying hard enough.”  Mistakes mean you and your business are growing.  Consistently exploring alternatives and evaluating your decisions will help you figure out what’s working.
  11. Measurement – A number of general guidelines should be followed when making goals and measuring them.  First, make goal-setting a process and communicate these goals to those involved.  Second, be certain to understand the different needs in different situations.  Third, be sure to use clear and simple measurement tools.  Fourth, be sure to use the process for improvement (rather than simply as a tool for criticism).  Focus on the mediums that work the most; not based on trends, but on what has the best outcomes.

Dr. Bert Shlensky has an MBA and PhD from the Sloan School of Management at MIT.   He is the President of the New York-based consulting firm The Startup Connection, where he uses his 30 years of high-level business experience to guide his clients towards maximum sales and profit. For a free consultation, please visit www.startupconnection.net.