5-4-3-2-1 Countdown for Entrepreneurs (6/9/22)
5
Tactics for startups to weather a downturn
Markets and financial indicators aren’t great, and the startup ecosystem is certainly not immune. As conditions for investors deteriorate, startup fundraising will suffer, as well. For you and your venture, that means your next round is less likely to close; valuations are being pushed down; terms and timing will worsen.
In this environment, you should consider five steps to recession-proof your venture:
· Anticipate what happens if a round doesn’t close
· Seek business models that require less cash
· Find faster ways to get cash flow positive
· Lengthen your runway to 2+ years
· Trim non-essential costs
With a focus on solid fundamentals, you’ll reduce risks and boost your venture’s odds of success – regardless of market conditions.
4
Steps to NOT “fail fast”
“Fail fast” may take the award for worst startup advice, yet it is often touted to early-stage founders. This advice was partly born from a bigger concept: “We learn more from failure than from success.” Thus, failing faster is better – more insight in less time. In theory, that makes some sense, but there’s a sizable problem: Not all failures are created equal, and most don’t create any useful learning. So, speeding up un-successes? That usually just makes matters worse.
But you can increase your odds of successful failures, if you keep three key rules in mind:
· Control the experiment. If you execute a strategy with very few moving parts, when things go wrong, you can pinpoint the cause.
· Limit your exposure. Even if you learn a ton, if a failure kills your venture all that insight is of little use.
· Don’t bail too quickly. “Fail fast” can tempt you to throw in the towel too early. If you follow the first two steps, staying in the game longer can create valuable turnaround opportunities.
Instead of trying to make losses happen quickly, I recommend applying the following 4 steps to any major business decision or objective:
Step 1: Visualize “failure” just as much as success.
Step 2: Measure what matters (and most things don’t).
Step 3: Be as decisive with “bad” news as with good.
Step 4: Find opportunity in every unexpected result.
3
Imperatives in sales
As an entrepreneur, you are constantly selling. Whether you realize it, or like it, it’s part of your job description. As Daniel Pink put it, “To sell is human.” We try to affect the behavior of others.
Just think about all the places we sell: Motivating the team to support your vision; courting a candidate to accept your offer; getting an investor to write a check; landing a strategic partnership; signing up a new customer; asking a colleague for a favor...
The effectiveness of any “sale” comes down to getting three things right:
IDENTIFY. Be sure to understand your target extremely well. Get as narrow and specific as you possibly can.
INTERRUPT. Assume no one is ever patiently waiting for your request. You need to arrest and hold their attention.
INFLUENCE. Once you get the attention of your narrowly defined audience, find the intersection of the behavior you want and the motivation that truly drives them.
Before your next attempt at persuasion, think through these three “i” words. Your selling will get a lot easier.
2
Keys to effective decision-making
Exceptionally successful people seem to get so much done. But, in reality, they do less to accomplish more. The trick? They do two things extremely well...
As both General and President, Dwight Eisenhower’s decision-making was stellar. His approach lives on via the “Eisenhower Matrix.” His approach focuses on importance and urgency.
If a decision is:
· Important and urgent. Do it now.
· Important but not urgent? Do it later.
· Urgent but not important? Delegate it.
· Not urgent and not important? Delete it.
The most successful leaders focus on the last two: delegate and delete.
As General and President, Ike’s teams were vast, so delegating was easier for him than for most. But today, even the solopreneur can delegate well. Think: tech, automation, and the gig economy.
Deletion might just be decision-making’s MVP. “No” distinguishes the busy from the successful. The next time your plate is overflowing, don’t hunt for more time or efficiency. Focus on how to do less.
1
Call to action
Marcus Aurelius, the wise Roman emperor, wrote, “...there is a limit to the time assigned you and if you don’t use it to free yourself it will be gone and never return.”
He wrote that as a reminder to himself, but it applies to any of us considering a leap – like when entrepreneurs stare down great uncertainty and decide to start a new venture.
Don’t get me wrong. As an adviser, I never pitch unbridled risk. But there’s a yearning to do something daring within us all. Sometimes we need to act on it before it slips away.
Stay safe, stay happy, stay in touch!
Adam
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