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          TAFaulhaber Photo
2023 Survival Pack
for the
Emerging Business
very emerging business struggles in a highly complex and competitive environment. Their position is almost always precarious. Only one out of 20 new ventures launched will survive to celebrate its Fifth Anniversary. How can we enhance our expectations of survival — and profitability?

          Bullet   VST Goals. The successful emerging business will flourish under the tough discipline of very short term (VST) goals. These are daily or — at most — weekly targets, specific and carefully monitored. They are achievable numerically-measured performance goals to be corrected promptly, if necessary. The units of measure should be as simple as possible and — whether two or 2,000 employees — should be understood throughout the organization. Often, physical units may be preferred to monetary units of measure. We are focused on what we are specifically accomplishing today and this week; if we meet our VST goals, our quarterly earnings will take care of themselves.

          Bullet   Reality Checks. Ubiquitous spreadsheet programs now give us the ability to construct the most elegant scenarios of our future. The manipulation of different variables bracket the ranges and composition of our anticipated success. Unfortunately, what appears so graphically and colorfully on our computer monitor is quite commonly failing to depict reality. There is a terrible danger of being seduced by the wizardry of our spreadsheets and ignoring the blunt messages of the marketplace. The real world  particularly for the emerging venture — is not a continuum; it is lumpy. Often, cash comes and goes not in an orderly and smooth daily or weekly pattern, but with large outflows and inflows notable for their erratic timing.  Cash flow, especially, seldom conforms with the workmanlike projections displayed on our computer monitor.

          Bullet   Competent People. Facing the immediacy of maintaining low direct expenses and overhead, emerging businesses often succumb to the lure of bargain employees — frequently friends and family members, eager to “help” the business and willing to work for below-market compensation. In most instances, experience demonstrates this will be a penny-wise-pound-foolish practice. Cheapness rarely equals competence. With virtually no room for error, the emerging business can only afford the most competent people — most likely, higher-paid people. Cheap and marginal people will frustrate our most proficient employees, absorb unacceptable amounts of management attention, undermine quality and delivery performance, and alienate our customers, Don't look for people bargains; look for superior competence!

          Bullet   Test the Strategy. The world is littered with outstanding product and service concepts that failed because the strategic execution was faulty. While strategy is not something to be fiddled with every day, it is essential that our strategy be articulated, understood, and continually re-evaluated to assure it is working effectively. This requires valid feedback from our present and potential customers as well as unvarnished competitive intelligence. We must understand clearly where we are and where we are perceived to be in the marketplace vis-a-vis our customers and our competitors. Success is rarely attributed to the grand concept; it is found in the meticulous execution and re-deployment of each component of our strategy. "Sweat the details!"

          Bullet   “Board of Directors”. Even the tiny enterprise needs the inputs of counselors detached from the day-to-day operations who can and will objectively challenge the assumptions and actions of the principals. This is not a “Board of Directors” performing the legal functions of governance. It is a group of two, three, or half a dozen men and women who know and respect the principals, understand the business, are dedicated to its success, and are willing to pose the tough questions. This group should meet on a regular schedule with some formality; they should be fully briefed before each meeting. The principals must be fully open, candid, and genuinely seek the guidance of this advisory group. “The Board” can be a solid reality anchor for the emerging business — a resource of immense value.

          Within the emerging business, using these five tools proficiently can greatly improve our expectations of survival — and profitability!

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Thomas A. Faulhaber, Editor

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Revised:   July   14, 2023 TAF

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