Find a Viable Business Model
- The ultimate goal in this stage is viability. Do whatever it takes to find a viable business model – including changing people, changing your product, and moving into a different market – and change models multiple times if necessary.
- Test, listen, and learn in the real world. Adapt and iterate quickly.
- Do not run your startup like it’s a smaller version of a big company. A new company needs different people, management techniques, and strategies than established companies.
- Find a high-growth market to exploit – there is nothing you can do to change a small market.
- Do not move forward with sales and marketing before you find a fit between the product and market. Understand the market and competitive landscape and develop as much evidence of customer demand as possible before investing significant time and money.
- Answer the basic question: Who will buy this and at what price?
- Use the right metrics to evaluate whether the business model can be scaled into a high-growth company.
- Plan for everything to cost 3X more than estimated and take 3X as long to achieve. Don’t fall into the trap of planning for the best case and expecting it.
- Cash is king. Every dollar spent should take you a step closer to finding a viable business model. Everything else is secondary.
- Founder(s) must project confidence and unite efforts by providing clarity, certainty, and security in the face of tremendous uncertainty. Leadership must be strong, decisive, and fair.
- Form a board of advisors, even if it’s informal.
Create Customers & Drive Sales
- Learn to recognize and adapt to the changing needs of the company.
- Accept the need to begin adding basic systems and structure.
- Do not make all the decisions, solve all the problems, or answer all the questions; delegation is key to succeeding in this stage.
- Focus, focus, focus – Remain focused on the biggest priorities that drive the business; don’t lose sight of the big vision.
- Hire multitalented people who fit both in skills and company values, and who can help grow the company. Work hard to select for cultural fit.
- Mine the existing market first. Resist the temptation to exhaust your limited resources finding new markets until the core business has gained broader market acceptance.
- Install minimal systems and processes. Mainly those to support the sales effort, serve customers, consistently deliver the product or service, and meet regulatory requirements. Outsource everything else.
- Hire task-focused people who get things done, and give them the autonomy to do the right things.
- Measure your critical activities to understand what is happening.
- Carefully invest money, time, and resources. Spend only on what is important, namely products and sales.
- Form an advisory board that includes outsiders: major customers, strategic partners, and a CEO who has led a high-growth company.
- Don’t hesitate to look outside your own organization for answers, ideas, and perspectives.
- Avoid making the top team too big, too soon, because extra people create extra unnecessary friction and sap attention away from sales efforts.
- Ask the critical question: Do I need or want to scale the business?
Scale the Company
- Transition from the multi-tasking role of the entrepreneur to the highly focused role of the managerial CEO and develop a plan to close the gaps if you’re missing key skills.
- Recruit and lead a team of experienced functional leaders who are different from you and who compliment you.
- Develop the executive team by adding strong members when necessary, helping existing members improve their leadership skills and constantly working to keep the team cohesive and aligned.
- Deal with people issues quickly, like making the hard decision to let someone go when your company outgrows an individual’s ability to contribute.
- Understand that good systems and processes, introduced in the right amounts, at the right time, are essential for managing growth and are not synonymous with bureaucracy.
- Don’t hire the person that can do the job that is open right now; rather hire people who can grow as the company grows and the business becomes more complex.
- Organizational success cannot be dependent on any one person or group.
- Begin the process of decentralizing management to allow the distribution of responsibilities and decision-making authority throughout the company.
- Clarify different roles and responsibilities to reflect operational reality.
- Establish a regular set of meetings involving everyone necessary to make effective decisions.
- Break down silos and create an environment that enables cross-functional communication, collaboration, and coordination.
- Build alignment throughout the organization by setting the overall vision, direction, and strategy of the company and communicating them with clarity.
- Open and maintain clear lines of communication, with the entire organization, so everyone understands what changes are coming and how they will impact them.
- Promote an ownership mentality throughout every level of the business where every person takes care of the company as if it is his own.
- Make a firm commitment to make the operational, organizational, and mindset changes that this stage requires. Sideline or even fire those who resist change.
- Where the complexity shows up in the business will determine the types of people, systems, and controls needed.
- Accept that turnover is a natural part of the evolution of the business.
- Recognize when to take your foot off the gas, downshift, and hit the brakes so that later on you can put the pedal to the medal and fly down the road.
- Assemble a strong external board and weight it with alliance partners, reference customers, and other CEOs who have successfully led high-growth businesses; these experts are a much-valued extension of your company’s business strategy and management team.
Become a Market Leader
- The CEO must focus on strategic issues and let go of day-to-day issues completely, holding the management team accountable for sharing strategic leadership.
- Continually evaluate and strengthen the management team and be prepared to make the tough decisions that one or more members of the top team are not suited for strategic leadership.
- Proactively lead the organization in the development and implementation of new growth strategies while the existing business is still growing.
- Continually challenge the company’s current methods of achieving success – look for signs of market changes and shifts early and act accordingly.
- Seek input from customers, prospects, analysts, and investors and integrate these outside perspectives into your own.
- Enable and promote an entrepreneurial mindset throughout the organization. Creativity, innovation, and risk taking must be institutionalized at every level of the organization.
- Create new businesses outside the existing organization and allow them to operate with different goals and metrics.
- Provide the resources, people, organization, and support that new initiatives need to succeed.
- Don’t leave culture to evolve on its own or assign it to the staff in HR.
- Focus on hiring and developing people with the skills necessary to run and grow business.
- Communicate a clear and compelling vision that will unify the organization and guide decision making.