Slowing Down While Revving Up: Remaining Strategic Amidst the Excitement of New Business Momentum
Emerging Entrepreneur Experience November 8, 2022
You’ve done it! You’ve made the leap. The internal and external naysayers and fearmongers that tried their best to talk you out of starting your business were unequivocally (or perhaps somewhat equivocally) conquered. Your business is formed, it is gaining momentum, you’ve hired an employee or two, and your newbie jitters have turned into unadulterated expectations of greatness. This thing is going to work and it’s going to be magnificent.
The excitement and anticipation new business owners (or seasoned businessowners with a new business model or idea) exude is infectious, and early success is often accompanied by a chorus of “advice” about how things are done (sometimes solicited, sometimes not), and an often-overwhelming set of potential paths forward. In the face of this, what should be your next move?
The real answer is that it’s up to you. But without a strong framework to help you answer this question thoughtfully, you run the risk of allowing others to answer it for you.
Define Your Long-Term Goals
A solid business plan lays the foundation for achieving your business’s long-term goals. But the first step in laying such a foundation is to actually define your long-term goals. Your business’s goals should be specific and, if you have co-founders, these goals should be thoroughly discussed among all interested parties. What is important to you, both personally and professionally? How important is maintaining control? (But seriously, be honest, how important is maintaining control?) What are your economic goals over the next 1, 3, and 5 years? How do you want to be spending your time over the next 1, 3, and 5 years?
Understanding and identifying your goals provides a framework for decision-making that will help keep you focused during the intoxicating stage of your business’s launch, help you filter through the “chorus of advice,” and make it more likely that the decisions you make are in line with your goals, and not what others may project your goals to be.
Hard-Wire Your Business in Line with Your Goals
We see the following scenario far too often: A business owner and her co-founders have been friends for years. They’ve discussed their business and the relative ownership thereof, and all three founders agree on the basic arrangement. One co-founder fronted the cash, one co-founder developed the idea, and the other co-founder has the skill and expertise to execute the vision. In consideration of these contributions, the founders have decided they will have equal ownership in the business. The founders intended to create governance documents (and maybe did create some basic ones), but then quickly shifted focus to execution of the business plan, without really spending time defining an understanding of the deal among them.
Of course, no one would jump into business together expecting the relationship between them to sour. But when business owners don’t take the time to create basic foundational documents like an operating agreement or shareholders agreement, small conflicts can quickly escalate into major conflicts, often because expectations were not properly set at the front-end. Although often viewed as a formality (or even a nuisance), the process of creating the company’s foundational governance documents, when thoughtfully executed, can provide a framework for driving important foundational conversations about each party’s goals, their expected contributions, the ways in which major business decisions will be made, how owners can leave the business (and what should happen in certain events), how a sale can occur, and other key considerations. While easily deprioritized, time spent on these issues at an early stage can actually increase the probability of success by ensuring alignment among the stakeholders. And if owner conflicts emerge, they can be resolved constructively and avoid the unnecessary demise of an otherwise successful business.
Set Your Own Terms
This same dynamic exists when dealing with your new customers. The temptation of many growing businesses is to focus on making the sale, with less focus on the terms of the sale, instead moving forward on a handshake (or worse, signing the customer’s one-sided form of agreement). Even when your business is taking off and time is of the essence, it is critical to memorialize your arrangements with customers through thoughtful agreements that appropriately communicate the business expectations and allocate risk. Do you offer software solutions? You should prepare a basic template SaaS agreement to offer your customers. Do you provide professional services? A template master services agreement is a good place to start. Template agreements thoughtfully crafted to fit with your particular offerings in mind will not only protect you from a legal perspective, but will also demonstrate to your customers that your business, while new, is sophisticated and ready to provide quality products or services, again increasing the probability of success by ensuring alignment on the front end.
Avoid the Trap of Inertia
Momentum can quickly turn into inertia, which is fine to a point, but can itself be dangerous for the very simple reason that your goals, and the business environment in which you are operating, are subject to constant change. Building in time to pause and reflect will give you the peace of mind that the decisions you are making are not just a continuation of yesterday, but reflect your goals of today.