We can get so obsessed with strategy, our great idea, and finance, etc. that we ignore parameters which can be critical to our success. One of the biggest mistakes I see startup owners make is failing to consider parameters as their North Star.
“If you don’t know where you are going, any road will get you there.” – Lewis Carroll, Cheshire Cat
Over and over, entrepreneurs come to me without a clue about what they’re aiming for. Short term vs long term, profits vs growth, risk and efficiency vs innovation all need to be considered in executing strategies.
One of the most important goals is the changing consideration of effectiveness. MacKenzie Scott and Melinda Gates illustrated this beautifully with their approach to charity and wealth.
They’re spending more instead of building big war chests.
They’re donating to small, more community-based charities rather than established institutions and providing seed money as well as operational funds.
They’re using more subjective funding criteria, requiring less proposal work and demanding less extensive reviews to encourage new organizations and facilitate innovation.
They are funding more women’s and poverty groups.
Their goal was to approach charity more effectively. Their rationale was that funding hunger, health, poverty and social justice with innovative contributions would provide more benefits than the opera or large universities. The result was a complete shift in charitable donations.
Measurement: Just Do It: Measurement is one of the most important parameters. At its simplest, it’s looking at where you vs. where you want to be.
Measurement for the sake of measurement. however, gets you nowhere. Ask yourself (and answer honestly!):
What am I measuring?
What metrics am I using?
What is the purpose of the measurement?
Here’s the thing every successful business owner knows but no one ever tells you: measurements of sales, profits, service, and customer satisfaction are vastly underrated.
Measurement also needs to consider qualitative metrics like speed, motivation, innovation, employee satisfaction, and quality. I recommend using qualitative questions like “How am I doing?” as well as more traditional qualitative measurement tools (remember: these tools run the risk of measuring the wrong information or letting bias inform results).
Embracing change, finding alternatives, being flexible, and innovation are the keys to success. AI, climate change, income inequality, and women’s rights are key factors affecting parameters and strategies. For example, we cannot ignore that baby boomers are aging and whites are less than 50% of new births.
As startup owners, this means the traditional revenue generation approaches may not be working as well as they used to. New markets and demographics need increased attention.
The advantages of AI – in terms of efficiency and speed – are yours for the taking if you take the time to familiarize yourself with the new technology.
Take the time to examine your processes for developing solutions and assessing progress. Many organizations continue to use authority, hierarchy, etc to govern decision making. However, the world – and business – has evolved to recognize commitment, success, teamwork, logistics, collaboration, and coordination as critical parameters in most successful organizations. Invest time in looking at how you come up with solutions, determine what progress has been made, and coordinate across teams.
Tips for Understanding Parameters
Consider Both Social and Analytics Issues: The realities and changes in parameters like population, the economy, political environment, and social values should be regularly assessed. Variables are changing faster and more frequently than ever. The more you understand these parameters, the easier it is to keep up as they change and evolve.
Commit to Action: Nike said it best, “Just Do It.” Refusing to make a decision is a decision in and of itself. Knowing what’s right and failing to act on that knowledge is one of the biggest mistakes startup owners make. Do your research, make your measurements, check in with your gut, then act.
Move Beyond Cause and Effect: Cause and effect is the go-to answer for “why” something happened. One of the oldest questions on cause and effect is the proverbial chicken and egg issue. However, most relationships involve a variety of factors. Dig deeper to identify all the factors involved in an outcome.
Embrace Risk and Trust Your Intuition: Analytics can produce quantifiable data that paints a black and white picture of your reality. Faced with the chance to take a big risk? Check in with your gut — and then trust that feeling. We all know the names of the billionaires who chased dreams others said were insane. The people who think outside the box are the ones who create real change in our society.
Avoid the Pitfalls of Bias: The biggest problem with parameters is the management of bias. Most bias, especially in small businesses, is simply human. Your assumptions, analysis, and data can all unknowingly affect assumptions — ignoring this fact is foolish.
Improve Your Prediction Capabilities: One of the crucial aspects of parameters is risk and outcomes, which are greatly affected by probability and information. Predicting results where significant and consistent historical data is available is fairly simple. Predicting results for new programs with little or inconsistent data requires developing educated estimates.
In summary, understand the importance of parameters in your decision processes. The assumptions, results, effort and process can be greatly aided.
Contact us for a FREE evaluation and get an alternative perspective on your business. We’d love to help you identify the ways to adapt to current trends. No one has time for BS – so we’ll cut straight to the chase and answer any questions you have.
Dr. Bert Shlensky, President of StartupConnection, has an MBA and Ph.D from the Sloan School of Management at M.I.T. He has helped more than 2,000 clients benefit from his business acumen. He now focuses on working with select startups and small businesses.
Measuring for sake of measuring is a waste of time. In order for measurements to be a valuable part of an effective strategy, they need to be more than passive content that’s mostly used for identifying problems.
To be successful, we need to know what we’re measuring and why, use clear and simple measurement tools, and clearly communicate processes and results. And, here’s the key, measurement is a process for improvement and shouldn’t be used as a way to beat ourselves or our team up.
To help you avoid common pitfalls, here are some helpful hints for making the most of your measurements.
Measurement should clearly relate to goals. Since goals can be complex and you’re often operating with more than a single goal, this can be tricky but is essential and starts with strategic goal setting. For example, focusing exclusively on short term profits can reduce efforts towards critical factors like investment, innovation, satisfaction, effectiveness, and growth. Corporate strategy and sports teams demonstrate this by reducing long term focus on growth to meet immediate needs.
“Regression to the mean” is a well-respected and valid tool you should be utilizing. While it sounds complicated, the term is just used to describe the statistical tendency for data to trend towards an average. For example, the average U.S. male is five foot nine inches tall. Estimating the average height of men after viewing a bunch of 6-foot athletes is disruptive. However, we do this exact thing regularly when it comes to measuring the stock market, the weather, and sporting events.
The 80-20 rule generally works. 80 percent of your efforts generally account for only 20 percent of your results. However, the flips side of that means that just 20 percent of your customers and products can be prioritized to produce 80 percent of your success — and that’s pretty cool.
You need both objective and subjective measurement. We tend to rely on quantitative measurement because it is believed to be more reliable, consistent, and, valid. While true, we need to make sure we’re looking at subjective measurements as well. Qualitative measures like effectiveness, quality, prioritization, and satisfaction can be just as – if not more – important to the success of your business.
Perceptions and bias can greatly affect measurement. Selection and sampling can affect the measurement process. So can our own internal biases and perceptions – without us even being aware of it! Our perceptions are frequently based on recent events. We tend to ignore simple cultural situations like weather, group history, and success. My simplest recommendation is to avoid being the last to speak to a hungry audience!
Measurement must consider change. We’re often slow to modify measurement activities. COVID and the associated years must be considered when analyzing data moving forward. For example, 2020 and 2021 data can be outliers in any trend analysis. Without considering the change in external circumstances, we’re likely to draw incorrect conclusions from the data. Economic, political, and social changes can also alter results. For example, the aging of our population, the popularity of remote work, Zoom meetings, and increased income inequality are having dramatic impacts on consumer behavior and the economy. The real question isn’t whether things will change — it’s whether you will change with them.
Don’t eliminate outliers. Risk tends to scare people. Our first thought is often that we’re going to lose money. In reality, many low probability alternatives have huge payoffs and limited risk. For example, young people should embrace risk in their early career efforts since job turnover rates are high anyway. Even as you move up life’s ladder and start investing, the mentality remains the same and your portfolio should include some high-risk investments. This concept plays out regularly among gamblers – who pursue the best odds, not the lowest ones – and sports statistics that now include 3-point shots, fourth down conversions, and bases stolen.
Different efforts are required for considering alternatives and decisions. Effective solutions are limited by the alternatives considered. Making decisions is based on establishing criteria and eliminating alternatives. Thus, developing alternatives requires open and widening efforts.
A relationship does not mean cause and effect. Ice cream sales and violent crime are related. However, extreme heat- not the two factors themselves – are the cause. Nevertheless, variables like weather, demographics, and the economy can be related to any number of factors. Resist the urge to automatically assume causal relationship where there is none.
Understand the diversity of data distribution. Typically, we just assume that data is distributed normally – with a high midpoint and fairly equal higher and lower numbers. If you’re measuring something like height, this is pretty accurate. When you start measuring more complex things like wealth, things get more complicated. Understanding the diversity of data means considering the impact that issues like change, disruptions, and uneven growth have on results.
Is your measurement valid and accurate. Not everything can be measured or always be effective. For example, for decades the measurements used to create baseball statistics neglected to take the Negro League into consideration — and, therefore, presented inaccurate data. Recently, this has changed and stats now include the Negro League and include discussions about how many no-hitters Satchel Page (since many were previously unrecorded).
Understanding the strengths and weaknesses of your measurement is critical to success. There are a number of tools that can help mitigate the challenges.
Historical or similar data can sometimes serve as a surrogate
Simple estimates can provide a range of solutions
Comparing the consequences of different alternatives can show the implications of different solutions.
In summary, measurement is an opportunity to improve performance and shouldn’t be feared or neglected. Set goals, use clear and simple tools, utilize the process for improvement and take comfort in the fact that even if you don’t reach your goals, you’re further along than where you started.
Dr. Bert Shlensky, President of Startup Connection, offers experience, skills, and a team devoted to developing and executing winning strategies. We’re here to help you get on track and stay there as you move forward. We welcome comments, suggestions, and questions.
I recently spoke with two aspiring entrepreneurs about launching new businesses. Unfortunately, their chances of success seemed slim because they were more focused on their dreams of wealth than on the essential groundwork needed to thrive. They were simply unwilling to do the thinking, research and planning to be successful. Try not to be part of the 90% of entrepreneurs who fail within 5 years.
For example, the first requirement is to simply write things down. Let’s break down what’s crucial: first, you need to document your plans. This doesn’t have to be fancy; goals and strategies. Start with a flexible document that evolves as you progress, focusing on substance over style. If you can’t articulate your plans in writing, you probably haven’t thought them through.
The initial requirement to develop a successful business is to be able to describe it. What is your business concept? What do want to do, why are you different and why will you succeed? This will change as the concept evolves, but you need a framework to develop and evaluate the components of your business. This framework further guides your development and evaluation process as your idea evolves. Entrepreneurs who fail frequently don’t do this.
Consider the key components of the business. Pricing, quality, service, variety, distribution and marketing are just some of the considerations. Your approach will vary greatly depending on whether you’re selling high-ticket items or everyday goods. For example, selling Superbowl tickets for thousands of dollars is quite different from the cheap umbrella salesman who suddenly appears when it rains.
Communicate your unique value proposition to your target audience. This is one of the most difficult tasks of launching a new business. We all get excited about our differences, but does anyone understand them? Do enough customers care about your difference to change their behavior, or are they committed to a “we’ve always done it this way” mentality?
Develop, test, measure, and adapt. Business is dynamic, so your approach must be too. Many plans, forecasts, and proposals are done in a static format, with one-dimensional analysis and results. Often, they are flawed because we live in a more dynamic and interactive world.
For example, branding, marketing, pricing, and operations all must be viewed as an integrated program rather than separate and isolated activities. Similarly, businesses need to have alternatives at the ready, and processes in place to adapt. Mistakes will occur. Remember, Thomas Edison tested thousands of light bulbs before succeeding.
Will you make money? Many entrepreneurs who fail start with the wrong question: How do I raise money? But they haven’t worked out the details of why they need money, what they will do with it, and how they will pay it back.
I suggest an almost opposite approach. Develop your needs, resources, plans and cash flow and then execute programs to raise capital. Some tips to improve this:
Develop initial timed estimates that will be continually revised.
How much revenue, expenses and profit will you generate over certain periods?
What assets do you and associates have and how much can you afford to risk?
When it comes to financing, focus on understanding your needs, resources, and cash flow before seeking capital.
There are a number of tools to reduce investment needs. These include borrowing against cash flow, outsourcing, pledging personal assets, and developing investments as the business progresses. Outsourcing efforts like manufacturing, distribution, services, and rent are particularly recommended to reduce requirements and adjust as the business grows.
As a rule, most businesses take six months to a year to even start. Consider how long it will take to get off the ground and calculate your startup expenses accordingly. Have you detailed the startup expenses and investment costs to start the business? Those include overall expenses, equipment, salaries, website development, product development, administration, pre-payments (like rent deposits) and more. Remember that upfront marketing, promotions, public relations, and development costs can affect income and cash on hand.
Digital is a critical aspect of almost any entrepreneurial pursuit today. Digital tools are essential in today’s business landscape, so plan to invest in a website and other tech necessities. Digital marketing, like Google ads, frequently has the advantage of both testing and pay as you go. As a result, revenue can occur much earlier than with traditional marketing efforts.
Can you deliver what you sell? Operations and logistics are frequently viewed as secondary functions that can be outsourced. However, efficient management of inventory and staffing can make or break a business.
Balancing and managing inventory to serve demand and reduce closeouts can be critical to success. Even in service businesses, scheduling staff to meet demand and avoiding time and money wasted can be critical to success. Reducing lead times, improving flexibility, and planning can improve effectiveness and lower costs.
Many operations experts have shown that 80% of sales are derived from 20% of offered products or services. Simplicity is key. Entrepreneurs waste time, money, and frequently add confusion by adding too much complexity to their business models. When and if possible, always go to the KIS Method (Keep it Simple).
In summary, success in entrepreneurship requires careful planning, evaluation, and execution. Many failures could have been avoided with better preparation. As my former manager once said, our low success rate wasn’t due to lack of effort; it was because many entrepreneurs were better off keeping their day jobs.
Starting a business is not easy. An entrepreneur needs to understand and express his/her passion. To do so, means to develop a mission statement and a plan. But that’s just the tip of the iceberg. Starting a business also requires enthusiasm, energy, and persistence to market your business concepts to suppliers, customers, and investors.
For more information download a free copy of my book, Passion & Reality for Business Success.
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.
If you are an entrepreneur, someone looking to start their own company, or someone who just wants to be the boss, you are positioning yourself to be a leader, and there is no greater nor more vital role than that. Handling capital, handling personnel, or presenting a product or service to consumers demands the right temperament, the right balance, and the right mindset. It is an awesome responsibility to be a leader, one that can never be taken for granted. But leadership is not measured merely in profits, it is measured in the environment you provide to your employees or co-workers. You need to lead yourself to success by being the best leader you can. It does not mean you have to be Mr. Dithers from the comic strip Blondie, reduced to kicking people in the rear end because they are not performing the way you think they should.That can get laughs in the printed form, but it does not work in the real world.
So what are some of the qualities that constitute an effective leader? Well, here are some we feel are important:
Set the example. Even if a new hire is given a step-by step explanation as to how to function at their job, they will still look to see how it is done by someone who is already there. If, as the leader, you do the right thing, and follow the same procedures you lay down for your constituents, they will naturally follow. Combine that with the energy and commitment needed for the job, and it helps enhance any instructions given to a subordinate. You will not need a flashing sign indicating the way to do it; it will be absorbed from the atmosphere itself.
Mistakes do not have to be fatal. Remember all the mistakes and all the faults you had when you were starting your career. Even if you managed to correct such mistakes and codify how to prevent them from being repeated, no one is ever perfect. While the goal is to get the chance of risk as close to zero percent as possible, it can never be zero percent on its own. Let your employees know that mistakes can happen, and be sure that when they are correct, the knowledge is given to make sure they know what to do next time, and that they can move that knowledge down the line in the future.
Keep the lines of communication open. You never want an employee to think that a question is stupid, and that they should be afraid to ask it. This is part of problem solving. If there appear to be too many questions, there may be a larger problem with training and access to information that needs to be addressed as soon as possible.
Offer encouragement and reassurance. It is impossible to get anywhere in the business world without the power in positivity: in yourself, in the profession you have chosen, in the belief that your efforts will be a success. That positivity must be reflected not only in your activities, but in the activity of your co-workers and employees. Negativity creates paranoia and lethargy; positivity creates success.
You’re in this to be a winner. Nothing demonstrates this better than believing you’re a winner, projecting that you’re a winner, and using that as an attraction to make everyone around you a winner. Our services can help get you going towards that winning standard. Be the best leader you can.
Lawrence Miles is a writer living in White Plains, NY. His collection of essays can be found at https://lawrencemiles.substack.com, and it continues to grow. He is also a published poet, whose works have appeared in journals such as Maintenant #15, 2022 New.
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.
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!
