Avoiding the Hockey Stick Plan

After counseling over 1,500 clients seeking to start new businesses, it’s troubling so many of them seem possessed with what can be called the Zuckerberg, venture capital, or hockey stick plan to starting a business.

I typically read 3 to 5 startup business plans a week.  So many are simply outrageous just because of the projected growth curves.

Everyone thinks they are the next multi-million or billion dollar startup.  They find the need to project $15-20 million of revenue in a couple of years to get funding.  This was illustrated recently by the response of a client.  I asked her the basis of her forecast which showed a sales growth rate of 15-20% per week.  When asked about her assumptions she said,

“That’s what the venture capital firms say they want.”

In contrast, many studies of entrepreneurs from IDEO to Malcolm Gladwell contend that slow but steady, multiple product developments, experience, and testing are the best predictors of success.

To get it right, here are some simple suggestions for executing strategy:

Don’t expect instant solutions

Make sure to remember, venture capital, crowdfunding, angel investors, and marketing tools such as social media, advertising, etc., all take lots of work and are not instant solutions.  As an illustration, TV’s Shark Tank is really not just entertainment.  Shark Tank panelists frequently ask entrepreneurs how much business one has done and how much money one has made as key criteria for their decisions.

Do some market research

I cannot tell you how many clients discuss the uniqueness of their ideas when there are pages of competitors who are frequently more experienced, cheaper, and even better on Google or Amazon.

Think small, develop ideas, test, and adapt

Think of your false starts as learning experiences, not failures.

Develop a business proposal that works

You can execute and make money before thinking about huge success stories.  It is much easier to grow and finance a proven model than support a hockey stick plan with few proven parameters.

Hire good resources and continue to test, measure, and adapt

Make certain the people you hire have real expertise and will do what you require.  Hiring with the goal of saving money usually results in mediocre outcomes at best.  You get what you pay for.

Make Use of demographics

Understand and take advantage of the changes in demographics, the economy, and your environment.  For example, large companies are really floundering with respect to innovation and growth, especially when considered in regard to demographic changes and the growth of mobile devices.

Be realistic

Don’t be blinded by what we call “confirmation basis” which says every idea we have must be terrific.

Have fun!

Conclusion

Follow these suggestions, and you will find yourself ahead of the majority of business entrepreneurs seeking success.  Ignore them, and you will find your business floundering or, at best, succeeding but not taking advantage of all that you can be.

Bert Shlensky is president of www.startupconnection.net and realistic planning, testing, adaptation and execution are key to business startup success.