A venture’s storyline or timeline goes from innovative idea through startup, scale up, sustaining, and possibly exit. A creative, innovative idea is accepted as critical; in fact, a LinkedIn analysis of hundreds of thousands of job posting found the most desired skill for applicants was creativity. That said, Thomas Edison’s famous line resonates with entrepreneurs, “Invention is 1% inspiration and 99% perspiration.” This will be a sweaty topic!
Startup Phase
Previous topics have covered Startup issues so only reminders are needed here. As an innovator, you identify a present or future need (or one you can induce through marketing). Ensuring that the market is not already saturated with ventures meeting these needs, research your opportunity and your potential market. Get legal and business advice and make sure you have attorney and accounting services. If you’re starting your first entrepreneurial venture, know that you may be able to begin with very little funding, perhaps self- or family-funding. Venture Capital is your last resort unless you are experienced. If you have enough drive and passion to make an impact through your venture, go for it! You’ll figure it out as you go. Just make SURE your legal foundation is secure.
Scale Up Phase: Grow your Venture
Starting a business can be an all-consuming task burying you in legal, structural (who’s on my board), and a torrent of ideas. If your idea and initial execution is good enough to survive the startup phase, and you are actually succeeding a bit, then you focus on scaling up your venture. The scaling of a venture demands different skills, management, and vision than the startup phase. Here’s a short overview of five reasonable steps or elements of the scaling process from CEO of Small Business Trends, LLC, Anita Campbell: https://www.score.org/blog/how-scale-business
Inc. advocates seven different steps seen through a different lens. The two models don’t contradict each other, there just isn’t ONE way to grow your venture. It depends on your venture, your skills, your market, and chance. So regard the different models a listening to different experts give different advice. It give you a broader picture and twice the information! So here are seven also reasonable parts to scale your venture: https://www.inc.com/neil-patel/7-ways-to-prepare-your-startup-to-scale-up.html
Analyzing and Minimizing Risk
“The biggest risk is not taking any risk… In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.“ ~Mark Zuckerberg. So begins the very brief Inc. article on managing business risk that follows. Risk is an essential part of gain just as failure is an essential part of innovation. If you know your business, your market, and you your venture who you serves (your market), you can identify the real risks better than any generic business or risk analyst. Unsurprisingly, much of the risk-analysis information comes from the insurance industry, a group not known for innovation or real risk. Here’s the link to 4 Ways to Manage Risk in Your Business: https://www.inc.com/rhett-power/4-ways-how-to-manage-risk-in-your-business.html
S.W.O.T. – Note that risk is expected in any venture whether it is a non-profit foundation or a project within a school district, university, or large corporation. A risk may be to a career, a reputation, a community, employees, or customers—not just financial risks. One way to analyze risk in context is the S.W.O.T. analysis, identifying Strengths, Weaknesses, Opportunities, and Threats. Here’s a 3-min example of a S.W.O.T. analysis. You and your team, advisors, or friends can use the S.W.O.T framework to explore where risks, as Weaknesses and Threats, may be expected. Note that the analysis does not need to be done in a square format with short bullet points, and a cross-eyed cartoon figure is not needed to facilitate the process. Here’s Udemy’s Starbucks SWOT Analysis: https://www.youtube.com/watch?v=mR9eICQJLXA
Sustaining For the Long Haul
The business literature defines sustainability in two ways. The first, and of most interest to the entrepreneur, is how to keep a successful startup thriving and evolving over the years to meet changing conditions without becoming stale, bureaucratic, or inflexible. The second is how to improve business bottom line through financial, labor, and environmental best practices.
Rather than present rules for sustaining a venture, here’s a case study of a Minnesota family logging business in its third or fourth generation presented in less than 3 minutes. The dialog suggests ways the business has evolved, adapting to new technologies, and how the business leadership is smoothly groomed and transferred to the next generation. It also shows the pride and motivation of the family in their multi-generation business. Here’s the link to Sustaining a Family Business: https://www.youtube.com/watch?v=9eETnG9Vjvc
Here’s a 5-min video, The Business Case for Stability, that encapsulates Bob Willard’s 45-minute lecture presentation of his sustainability model: https://www.youtube.com/watch?v=KlW8-WW0k3g
Who Wants an Exit Strategy?
An investor in a startup may want her investment to increase 10-fold through your successful business after 10 years. You, the entrepreneur, have a business that is now worth many times that, but your also have debt from scaling up. You certainly don’t have enough cash to pay back your investor. Do you turn your business into cash to pay off your investor and for you to retire to the Italian coast? You could plan your business so that it is attractive for a larger company to acquire. The millions they may pay you will be enough to pay your investor and to purchase your coastal property.
Another way would be to offer the opportunity for new investors to replace the investor who is cashing out. If your business is continuing to grow, this could work. A more extreme and costly example would be to take your business public with an Initial Public Offering (of stock). Your venture now has a life of its own, and you can sell your shares for Euros and set off for Italy.
If your venture is not thriving, if you are tired of running it, and no one wants to buy it (imaging trying to sell a family-owned bookstore!!!), it may be time to sell any assets and terminate the business. Oddly, your exit strategy can play a key role when you are starting up. If you need to present a business plan for a bank loan, to attract a partner, for a Venture Capital interview, or a grant application, they will want to know your strategy for sustaining your venture and for exiting (or continuing without you). That demonstrates to them that you have a goal in mind and have thought through the lifespan of your venture. Here’s a brief 4-step exit strategy: https://www.youtube.com/watch?v=NyXLP10O3WI