Failure to thrive

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Failure to thrive

There is a basic principle in start-ups that if you do not
reach approximately 2% of the market that you can address within the first two
years you will slide back down into the snake pit. Momentum is everything. The
critical factor is when you decide to start the clock. I have written on
several occasions about the benefits of bootstrapping, and one of the largest
benefits is that it  gives you the
control of the moment on which you start the investment clock, and, perhaps
more importantly, you can get all of your mistakes out of the way before you
start that clock ticking.

The causes of a failure to thrive can be broadly categorised
into three:

One – accidental

Two – bad management

Three – deliberate

Under the category of 
deliberate”, I think we
could fairly put the cases in which an investor culls their portfolio, where
one of Porter’s famous five forces comes bites you very hard (for instant
action by the state), or whether market itself entirely collapses.

 In the “accident” box, one might fairly put
personal health failing, fire, flood, an act of God, or some external discovery
that utterly changes the market all the forces which act upon you. Generally, I
think you might have guessed, accidents don’t act in your favour!

 And that leaves
is conveniently with “bad management”. Let me break that down a little further,
since you, as management, have ultimate responsibility. It is entirely too easy
for you to fall into one of the traps of:

·     
Too soon

·     
Too late

·     
Too cheap

·     
Too expensive

·     
Too fast

·     
Too slow

·     
Or, worst of all, having the wrong product for
the wrong consumer.

Which just leaves us trying to eliminate bad management. No,
not ‘eliminate’ like Tony Soprano, eliminate as in plan so that it never
arises. It may seem, at first blush, that not all of the factors in a business
are under your control, but the timing is. Cost and pricing are. Speed of
development is. The design of your product is definitely within your control.
Fate may not have given you easy access to the correct customer, but certainly
that responsibility is yours.

 Solutions, and
all of which lie in the hands of management, are relatively straightforward.
The first and most important is to set yourself a target of controlling at
least 2%, and preferably 5% of the entire market space in a very short period
of time. That should stop you sliding back into the noise floor of your
business. Also, get cash flow. Obvious really, as it is called a “business” and
not a “hobby”.

Management can then focus their attentions on bootstrapping,
and let us be clear here the bootstrapping mean so much more than just building
a prototype. Bootstrapping implies that you have tested the market in terms of
product fit, timing, and pricing. If you have done that, and you’ve done a
reasonable amount of customer research, and that has been backed up with a
solid product design, then sales should follow. That is assuming, one has
actually employed people who are capable of selling.   A business is so much more than a good product idea.
Yet far too few entrepreneurs actually understand this.

 So, will you
fail to thrive, or will you blow straight through the roof on a rightward and
upward curve?

I really do think, no matter what you might think, that the
answer lies entirely in your hands!

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