With the complex business challenges looming in the year ahead, you may find yourself asking, “Is it possible to recapture that sense of passion, optimism, and urgency you felt when you first started your business?” The answer is “Perhaps.”
While every new year presents an opportunity to refresh your plans, the need for entrepreneurial thinking seems particularly acute heading into 2022. Labor shortages, supply chain issues, inflationary pressures, tax ambiguity, hybrid workplaces, and ongoing advances in technology can often seem overwhelming. But your business can’t move forward if you allow yourself to get mired in gloom and doom.
Instead, consider 2022 as a time to re-evaluate how, why, and where you do business. If you could start your business anew, what kinds of things would you do differently?
I was reminded of the value of start-up thinking when I ran across my copy of the book “Founding a Startup: What You Need to Know” by Terri Krivosha, a partner with the law firm of Maslon Edelman & Brand LLP.
I admire Terri because she is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps business leaders negotiate and draft multiple kinds of contracts, strategic partnerships, and joint ventures. She also helps develop and implement exit strategies and provides advice on selling or buying companies and raising capital to recapitalize businesses.
Leafing through Terri’s book reminded me of why start-up thinking can be attractive to the private-equity investors who ask me to introduce them to qualified acquisition targets. Here are four ways start-up thinking can change your outlook.
1. Start-ups believe anything is possible.
Their aim is to disrupt the status quo by seizing opportunities to introduce innovative ways of creating value for their customers. They aren’t bogged down by thoughts of “that’s the way we’ve always done it.” Investors like people who are enthusiastic, disciplined, growth-focused, and positive about the future.
2. Employees want to learn entrepreneurial thinking.
Some employees who resigned in 2021 quit so they could start their own businesses. Weary of the politics, lack of appreciation, and unrealistic demands in their current workplaces, some of the 2021 quitters believe that working for themselves will resolve work-life balance issues and other frustrations. Once they discover that owning a business can wreak havoc on work-life balance, some may return to full-time or part-time employment in 2022.
Returning employees may not necessarily want to rejoin their former employers. Instead, they may prefer to join companies where they can see entrepreneurial thinking at work. They want to learn from leaders who will listen to their ideas.
Encourage your employees to help you think like a start-up. How can we create better processes and procedures? Improve the sustainability of operations? Develop new products? Reach out to new markets? Build new revenue streams? Avoid disruption by emerging start-ups? Younger employees can offer fresh perspectives you might never have considered.
3. Successful start-ups pay close attention to the numbers that will attract investors.
Krivosha devotes a chapter in her book to “The Zen of Financial Statements and Financial Projections.”
“Financial statements and projections need to tell a story,” writes Krivosha. “The challenge to an entrepreneur is to enable others to hear your story while reviewing your numbers.”
She defines projections as “an estimate of what you think the financial statements of your business will look like for some future period.” She describes projections as a quantification of your business plans.
Base your projections on realistic, solid assumptions. Instead of setting vague goals such as getting one percent of the target market, map out the steps your company will take to achieve its revenue targets.
“Figure out the significant milestones associated with your company’s offerings,” says Krivosha. “Investors will be looking for the various points in your plan that will add value to your plan and could result in the value of the company increasing.”
4. Start-ups think about exit strategies as part of their business plan.
When entrepreneurs learn how to pitch plans to start and scale up a business, they are also encouraged to think about how they will exit the business. While it may seem counterintuitive to expect a start-up founder to think about the end-game, having a long-term vision for exiting the business can guide how the business is built, structured, and operated from year-to-year.
For example, if a business owner knows from the start that they would like to be able to sell the business in five years at a high multiple, that vision will affect their yearly strategies for hiring, marketing, technology investments, and financial management.
For More Ideas
If you want fresh, practical ideas for growing your business and preparing it for sale, give me a call at 561-542-2323. With the extensive network of experts the LaManna Consulting Group has developed, we can provide specific, timely advice that can help revive your entrepreneurial spirit and the outlook for your business.
RECOMMENDED RESOURCES
Founding a Startup: What You Need to Know by Terri Krivosha