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Essential Resources For CEOs and Entrepreneurs at Startup and Emerging Growth Companies
The Startup Manual And Business Design Tools Cd: You Only Get One Chance to Start Your Company (Secrets of a Serial Entrepreneur) 1st Edition
See All Our Products For CEOs and Entrepreneurs At Our New Product Catalog Web Site: Startup Planet
"If you are going in the wrong direction, more speed won't help."
�If the idea at first is not absurd, then there is no hope for it.� - Albert Einstein
"If I had six hours to chop down a tree I'd spend the first four sharpening the axe."
-- Abraham Lincoln
Secrets of Raising Angel Financing: How to Prepare Your Company for Angel Financing in Virtually Every Area
Welcome back from summer vacation. We did not publish the C-Level Advisor in August due to vacations and being way too busy with our new product launches and consulting work. We will be attempting to get this out more often.
Finding Out What You
�Don�t Know You Don�t Know�What gets most early-stage companies in trouble is the areas that they just don't understand that they don't know enough about. In other words the biggest problem is that they don't know what they don't know. Nearly every failed company will say they ran out of cash, couldn't raise enough capital, or just did not get the sales they expected quickly enough. But these situations are generally the effect, not the cause. Generally speaking, other problems that the company or entrepreneur does not understand very well are usually the root cause. This situation is actually far more dangerous than just not knowing, because you cannot tackle a problem that you do not even know exists. The best entrepreneurs and CEOs are learning machines and understand what they do not know. I call this the "Prudent CEO" or person that appreciates the fact that the last Renaissance man, or woman, existed hundreds of years ago. In this day and age, there is just way too much information that one needs to know in order to start any company without getting lots of help from others. Today, knowledge is doubling every eighteen months. Far more information is generated each year now than in the entire first thousand years of civilized society.
Would you decide to install your own furnace or rebuild your own car engine without having the proper experience? Of course not! Then why do people think they can write their own business plan, marketing plan, or design a new business model, which is a much more complex and experience- based process, when they have never done these before either? I suspect that the reason is that rebuilding an engine is physical and it will clearly provide immediate feedback of failure and probably cause confusion. However, tasks like writing a business plan will not fail for quite some time, maybe months, or even years. Of course the blind optimism of any entrepreneur, who has to be a little nuts to go against the odds anyway, is a big factor here too. So you have to ask yourself Have I done this exact task before successfully? If the answer is no, then at a minimum, you need a model to even do the job, and a guide, or coach to do a good job.
Typically, any new company will need at least four to five different skill sets at the executive level to be successful. Then you need those same skills sets at the actual execution level, and possibly even the management level too. Rarely does it make sense to hire all those people full-time on day one while you are still in a business model design and validation process. Yet without these people, you really cannot possibly "know what you do not know." Most often it does not make sense to have all these needed people on full-time staff during the first one or two years of running the business. Yet you can really not expect to compete effectively with others in the marketplace without all these skill sets on your team. Although it seems like a catch-22 of sorts, there are ways around this dilemma. This is why designing a new business model must be an iterative process, as team members who are added later add more input.
Typically you should be using virtual team members and consultants in small doses to fill in these holes and identify areas that can be improved dramatically. People often look at this as a cost, which it is short term, but over even three to six months these things ought to be a net savings if you are using the right startup oriented people. You do have to watch out for consultants who want to "do it right," when right is how a multi-million or even multi-billion dollar company would do it. I would guess only one in ten consultants and professional services people out there really understand how to work with a startup. Working in startup mode means being in the risk business and developing 80% solutions at 20% of the cost because things change too fast to do it "right."
So how do you figure out what you don"t know without all these experts on your team? In reality, there are only a few ways to ferret out what you don"t know and they are all either the result of leveraging someone else"s experience or based on your own systematic research. Since research involves lots of trial and error, it is way too expensive for a startup to research what it can just learn from someone else. Researching too much can even kill a company with very little time and cash. You need some trial and error for sure, but this should only be around your core value added and "new" business model ideas. If someone has done it before, it is always cheaper to learn from him or her, than it is to figure it out on your own. Models built on someone else's mistakes are by far a superior alternative and come in several forms.
On Figuring Out What You Don't Know With Models
The next issue of The C-Level Advisor will contain a model for figuring out exactly who you need on your management team.
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