Whichever way you look at it, the central theme in a business start-up is change.
Change is also the cornerstone of betterment, progression and growth, but in these ways it is often referred to by its another name: creation.
Our challenge as new business (start-up) leaders is both to create and at the same time to capture these positive forms of change. It is also our role to remember that change will not always yield its intended benefits and to make sure we plan around those possibilities too.
Success is a lousy teacher
Let me concede at this point that I am well qualified to speak on both the highs and lows of new business, having personally enjoyed both great success and also tasted the bitterness and humiliation of loss.
Although the losses were hard to take at the time, I am aware of the great self-change they lead to and I am now openly grateful for each of them. There is no doubt that my approach to new business is now richer and more robust than it was.
In this article, we explore the challenges of new business and study how great leaders move through the start-up and commercialisation phases of business life by applying the 4-step change formula we discussed in this Blog previously.
Where are you on the new business risk scale?
In very general terms, there is a scale of entrepreneurial activity that is directly related to start-up risk. It is important to recognise where you are on this scale – it will help you to understand your new business “start-up” risk and why this is the case. Beyond this, your leadership of your business will either magnify or reduce the risk that remains in your business.
Stuart’s New Business Risk Assessment – Where Are You?
On the far left side of the scale are new businesses launched by skilled and experienced industry professionals who have either inherited a business, lock, stock and barrel, or who have access to a starting portfolio of clients that underwrite a positive cash flow from day-one.
Without question, the combination of their industry experience and their positive ‘day-one’ cash flow means these new businesses have the lowest risk profile. As we move right from them, risk slowly increases.
Firstly, we find businesses started by similarly skilled professionals, but without secured day-one cash flow – risk here is a little higher, even though these types of entrepreneurs often know a ‘recipe’ for success in their industry.
Further to the right of this group we find business owners who, whilst not having experience in an industry themselves, enter an established market in a way that allows them to leverage off the resources, systems and support of others. This is the domain of most franchises – precisely where they are on the New Business Risk Scale will vary with the level of support they are provided.
The scale of risk from this point onwards increases tremendously, starting with new businesses who are launched within highly established industries but in which the owner has no experience or support and eventually reaching those entrepreneurs who seeking to create a new market for a product that does not exist and without any experience in its relevant sector at all!
Looking at this scale, it's easy to see why some people maintain that risk should proportional to return – unfortunately, it's not.
How does this apply to new business leadership?
As we considered above, where you sit on my New Business Risk Scale indicates the level of your business’ start-up risk. Left being low risk and right being high risk.
The actual risk that remains in your business beyond start-up, however, is entirely proportional with how it is lead.
Let’s now take a deep breath and apply our 4-step ‘leadership-during-change’ formula:
Step 1 – ask the tough questions
Although it is true that establishing crystal clear goals is important (the surest way to get nowhere is to aim at nothing), it equally important that you truly recognise your starting point to properly do this.
Asking yourself the tough questions that need to be asked and then answering them truthfully is the only way to achieve this. Tough questions and truthful answers are the way of great leaders - there is little to be gained by sugar coating the truth.
The first area in which you need to embrace this philosophy is in completing the New Business Risk Assessment, above. Before reading further, take out a pen and be ready to mark on the diagram where you honestly are. Now pass the pen to someone you can trust and ask them to do it from their perspective (not yours)! Chances are their insight is what you really need to receive!!
My tip – in assessing your starting point, make sure you take a realistic view on the constraints you face too. Constraints such as the funds you will need to invest, the cash you will need to continue living, industry barriers and the availability of your own time are all very real and need to be addressed.
Step 2 – Feel the reason
More than at any other time in business life, it is important to feel why it is that you wish to embark on your business journey.
As humans, we should never dismiss the strength and commitment that arises from having a deep motivation. When you align your passion in life with a compelling service based motive and connection to a target market, you are placing your business in a situation where it is aligned to what you love to do and to what your market most seeks from you.
Actually then operating your business occurs from a deeper place than the simple objective of producing a financial return – in my experience, entrepreneurs who tap into this dynamic are more prepared and equipped to survive the tough times that will inevitably arise.
My tip – Do not dismiss this step, even if you feel you know better. Take the time to find that pathway that most resonates with you and then test it with your target market: make sure that what you feel you want to offer them is something that actually resonates with them. If the feedback is adverse, keep looking!
Step 3 – Develop a simple plan
Having established a realistic understanding of your starting point, what your target market most seeks from you and both your objectives (personal, business market share and financial) you are now equipped with the three main reference points that will allow you to finalise a plan on how to satisfy them.
At this point, it is important for me to clarify that my version of a plan is a little different and a lot more practical than other plans you may have come across.
The plan you need to make now is actually your commitment to the series of very specific and practical steps that will move you directly towards your goals with the least fuss or diversion. You may wish to rename it your ‘commitment’ plan for this reason.
In creating your commitment plan, you should start by identifying the day-to-day activities that will progress you towards your goals. You should then structure all of your business activities, processes and systems so that everything you do is built around these and aligned towards them. This is a very basic but highly effective way of ensuring everything you do is aligned to where you are seeking to end up.
My tip - Taking time to align each of your daily business processes directly towards specific objectives is best done during start-up and before an attitude of “that’s not the way we do things around here” sets in. Do not rob yourself of the benefits that flow from this step by being hopeful that simply because you know your objectives that they will automatically occur – hope is NOT a strategy.
Step 4 – achieve positive & sustainable change
In the previous edition we explored how achieving positive and sustainable change is “a 99% leadership and 1% management mixture of fuel, context and accountability.”
Let’s consider how we apply this in a new business.
For some new businesses, fuel (or “motivation”) is not much of a challenge; in fact it is often the case that the owner’s “fuel” at start-up is higher than it will ever be again! This does not mean, however, that the owner’s enthusiasm is equally shared by everyone (or even anyone) else!
My tip – Be prepared to open up and authentically share your vision with your team and why you are passionate about it. Even if this only leads to one or two of people subsequently sharing your enthusiasm, they will be prepared to move mountains to achieve it – just like you!
On the other hand, during the start-up phase the creation of a leadership ‘context’ and culture of accountability may be as simple as walking into the bathroom and being accountable to the person in the mirror!
Even if this is the case, it is still important that a culture of accountability is created and embraced within your business (Not to mention that achieving this is much simpler during the new business phase than at any other time!).
My tips –
1. Start by looking at the commitment plan you made in Step 3.
2. Consider the type of behaviour that your business seeks to be renowned for – both within itself and with outside world. Use this to form a Code of Conduct.
3. Commit to both of these