Start (and keep) the end in mind!
Fledgling businesses often can’t soar, because early issues with the likes of payroll, financial data management and reporting effectively “clip their wings.” Businesses want quality expertise, of course, but they also want to minimize costs. So, they end up with the cheapest and most basic or standardized “packages.” And, they end up paying way too much for one-size-fits-all solutions and little to no support when they need it. As the business takes off, these entrepreneurs find themselves in a pickle; a sour bookkeeping issue, for instance, must be rapidly resolved lest it dwarf everything else within their operations. A good foundation in fundamental areas such as keeping “the books” supports the business’s robust health for the next year, and the next decade and beyond.
It is critical to view every aspect of operations through much the same lens; setting oneself up with the best option (not necessarily the easiest or most affordable alternative), which sustains the business rather than smothers it. So, this all-important sentiment applies to all vendors that one partners with and, to assure all bases are considered, think of all of the functions within your business. These functions may range from the tedious yet potentially time-consuming (IT updates) to the “high-value” (business development). The easiest and cheapest solutions from the get-go are often not the easiest and cheapest solutions over the longer term. It can end up being far costlier than one may imagine, especially as you have to pivot and potentially reverse procedures that were in place which were holding your business back in order embrace those quality, skilled processes and professionals that get you on the right track and propel the business from start-up to mature, high-growth market leader.
In fact, in the aptly-titled Start at the End, serial entrepreneur Dave Lavinsky applies reverse-engineering techniques to business plans. In the worlds that originated this term, such as manufacturing and software, reverse or back engineering entails deconstructing technologies, structures, aircraft and equipment to collect design insights. You may speak this language in your line of work, and be intimately aware of how this process enables you to determine how parts or components are designed. In that manner, you can recreate the part or component.
In the business world, “reverse engineering” applies when the end-stage goals take center stage. With the long-term vision as the foundation and the start, the rest of the business plan can be back-engineered, working from that vision to establish the assets, financial metrics and associated strategies to achieve those ends.
One should look at the “ends” both in terms of the business and in terms of the customer, patronage or members one serves; for instance, it is not sufficient to assert that, as a food business, you want to be the “best coffeehouse” or the “best Mexican restaurant.” You must also consider the business vision. Do you want to sell the business someday? Do you want to take it public? Is your goal to groom an internal employee and sell it to him or her down the line? Or do you want it to stay in the family? Lavinsky suggests going so far as to write down a day and a dollar amount that conveys your intentions. From there, one’s business plan from the get-go can account for:
How much revenue must be generated to reach that “magic number”?
How many customers must be served to achieve those ends?
How many employees must be hired to support those goals?
What investments in technology, plants, equipment and strategic partnerships must be made to realize those goals?
To ensure there are no hiccups, what type of training must be offered?
How should that training be “standardized”?
What quality control measures should be put in place?
A plan may then account for one’s footprint and the volume of product that is sold on an average in a given year; for example, you may determine that your product should be in a specific number of locations, as well as the average number of items that should be sold from each of those locations. And, to get to that point, you may also determine that a specific number of distributors or accounts are necessary to grow in those locations. Of course, no plan should be unbendable; 13 months ago, if someone had said we would be more than a year into a global pandemic, how would you have responded? We all knew the other shoe was going to drop at some point. The persistent, rosy glow of robust growth had to darken at some point. But, short of a truly curious prognosticator, who would have identified the current public health crisis as the factor that finally rocked the sustained upturn from the mantle it had grown so comfortable resting upon?
Now, dramatic, business- and life-altering events should not be the exclusive triggers that prompt ongoing refinements and improvements to the reverse-engineered plan. There may be changes within the industry, market and relationships (work family and family family) that are very specific to your experience and situation. Be aware of these nuances and account for them within your plan, as it is a living, breathing document. It should be groomed and nurtured as such to account for the one predictable aspect of life: change. Do not only start with the end in mind. Keep the end in mind.
Of course, all of these notions fly in the face of what is very much “human nature” and, more specifically, entrepreneurial nature. While you may not be aware of the dire stats (you can find them here), you probably know someone who has been forced to exit their business. They do not leave on their own terms. Instead, they have no control at the end due to unforeseen disability, illness or death, or unexpected disagreements, divorce or any number of distressing circumstances that they did not account for or anticipate with proper planning. At the start of the business, particularly, it can be hard to imagine what is down the pike five months, let alone five, 15, 25 years. Yet, before the startup owner knows it, he or she cannot imagine life without their “baby”: the business. By that point, the owner is not in an emotional or mental place to “let it go,” grow and mature beyond them. Inevitably, life has a way of making the decision for them.
This does not have to be “your future.” By accounting for the end at the start, and taking it into account through the life of your business, time is on your side! You do not want to leave the long, healthy life of your business and personal wealth to chance. This is not the time to cram for the exam, as so much more than a single grade on a single test is at stake. By surrounding yourself with excellent advisors, including Certified Exit Planning Advisors and Accredited Business Valuation Professionals, you can be confident that your business will stand the test of time.
“Keep the end in mind” (Stephen Covey) is Gregory Harr’s favorite quote. A partner at O’Donnell, Ficenec, Wills & Ferdig, Harr is joined by an entire team of professionals with extensive experience and designations to help your business start on an excellent footing, which best prepares and protects you and your team for the inevitable onslaught of changes that occur through every organization’s lifecycle.