by Hoogie Espinosa . June 11th, 2014
When you fall in love with something, whether it’s a person, or a discovery, or even a business, you tend to discount flaws. Other times, it’s more of that you feel comfortable since this is how you’ve lived life for quite some time and fear change. Whatever the case, it is quite important to identify when poop hits the fan and not turning left or right will just cover you in it.
In life, everyone faces walls that hinder themselves from developing. They can be gigantic, seemingly impossible, and gravely depressing. This is especially true with entrepreneurs and their product or service. When this happens, we need to stop and ask ourselves an extremely important question: Whether the sky is blue enough and we can move forward, or we turn around and change direction, change strategy. And trust me, your business will transform a lot before it finds stability: evolving products and mutating strategies until you find that sweet spot.
As you’re probably guessing, not all changes are destined to succeed. Just like the startup as a whole, they are cursed with failures and learning experiences. And before you decide to make a major change in strategy, you have probably already exhausted minor tweaks to your product. Thus it is important to record all of these: what you did, where it went wrong, how much money did you lose, etc. As you gain experiences with failures, you become more and more ready for that upcoming success.
But what exactly can you account for without breaking the bank? Cost of production is not cheap and mistakes cost even more. Enter the MVP, or minimal viable product. It is a mock product that has only the core features of the proposed final product and nothing more. By putting the MVP through closed alpha testing with a focus group, you can weed out products and features that people simply just don’t want and suggestions for better versions or products. By doing this with a small group, you accelerate learning, decrease costs, and release the product to the public sooner.
Like everything, startups have a beginning and an end. Good entrepreneurs should realize a projected “bad end” that results from not earning enough money by the appointed time. Note that this does not mean breaking even, but rather gaining the revenue you projected this product to gain. This lifespan is usually calculated as the remaining money in the bank divided by the monthly burn rate. Really simple. If you have ten times the amount you spend per month in the bank, then the project can only live for 10 more months.
However, this is not a reliable way of recording the days you have left. As startups are built in chaos, the amount of money you spend per month will not be regular. Sometimes it will be $1,000. Other times it will be $5,000. Maybe less. Thus the proper way to record the due date whether your business will fly or crash and burn is the number of strategic changes you have left.
When strategic changes fail to apply, it is usually caused by disillusionment through vanity metrics, incomplete failures through unclear hypotheses, or simple lack of courage. Failure is something difficult to stomach. An entrepreneur’s greatest fear is that this wonder child of a product or service does not become the great thing it’s supposed to be, and just withers into invisible mediocrity. Just like how a lot of people handle fear, many entrepreneurs tend to postpone the strategic change until the business is driven to a corner, but by that time it is already too late. As an entrepreneur, you should learn to grow fearless but wise, taking calculated steps that should seem to lead to the most efficient path.
Now that you’ve got what it takes to stand up to the monstrous task of realigning your business, when should you meet with your comrades to talk it through with them? The answer is every month, whether your business feels shaky or not. It’s important to regularly check the status of your startup, just as a parent checks regularly on their child. Too often is too redundant; too irregular and you increase risk.
This meeting should be held with product development to discuss product optimization and business leadership to talk about how customers are reacting to the company. Outside advisers would also be great, so they could offer a fresh look since everyone in the team might be too busy looking at tiny details, they miss out on the big picture.
If you want to know more about this subject, pick up The Lean Startup by Eric Ries. It’s a great book, easy to read, and comes with fun anecdotes about big companies when they used to be little. I’ll probably write an article on more books I’ve found helpful or inspiring in the near future, so watch out for that.
photo credits: hamedmasoumi via photopin cc; cutiemoo via photopin cc; epsos via photopin cc; safari vacation via photopin cc; lausdeo via photopin cc