Archive for October, 2015

The Entrepreneurs Journey

As a founder of a growing business, I’m always in a look out for opportunities to learn new techniques, connect with relevant people and bring some fresh ideas to table. On that basis based on one of our friends recommendation I attended a workshop called “Brand Expansion Workshop” delivered by Daniel Priestley. Daniel is originally from Australia and has successfully built and exited few business at very young age. In the recent years Daniel and his company are trying to coin the term “Key Person of Influence”.

The basic idea behind KPI is to choose your narrow niche and become the key person of influence in that area. This is not just a software workshop, I got a chance to meet people from different backgrounds like a doctor who wants to become a KPI in specific specialization, a guy who want to become a KPI for arranging holidays for disabled people etc.

A lot of times Entrepreneurs think their business problems are unique and keep struggling to find solutions to it. But in reality most of the business problems are pretty common, it will depend on what stage of the business you are in, and where you wanted to go next.

I really liked this particular slide, where it showcases the Entrepreneurs journey or the state of the business. 

The Entrepreneurs Journey

Start-up: Very early days, no money, no customers you got some idea and trying to make it work.

Wilderness: Where you have a product (some asset) you can sell, you are about 3 people company and annual revenue of 300k. This is pretty true, majority of the business (about 70%) will be within this territory. This is really a “Red Ocean” zone, where you are literally fighting for survival with items as shown below.

Blue vs Red Ocean strategy

Blue Ocean Strategy is another interesting concept.

Lifestyle Business: The next stage is Lifestyle business where you scaled your company to about 12 people and somewhere making less than 2m in annual revenue. The business is run like a family business, where you all know each other very well, no big processes in place, everyone know what they are doing etc. Here the founder will get some helping hands and he will not kill himself with 70 hours work week. A lot of people will be happy to stay in this zone and may not look into go beyond.

Desert: This is again kind of wilderness zone, where you are moving away from your comfortable lifestyle business and start moving your company into a performance zone. This is one of the risky places, it can go either way. Once you employ your 13th employee into the company, all of a sudden the soft cushion of closely connected people/family business kind of bond will start to break, you will start looking into putting processes in place like holiday policies, stationary shelf, performance reviews etc. Your 12 member team will start to split into multiple 4-5 member teams and they will all be doing things of their own. In this stage normally founders get into a lot of trouble like relationship issues, financing issues, etc.

Performance Business: This is ideally where most of the passionate entrepreneurs want to get to. About 50+ people in the team, with an annual revenue of 10m+. At this stage your business is completely self-run and not relying on founder(s) alone. The majority of the business will not make it into this stage since they need to cross the desert.

Unicorn: The final stage of the journey is unicorns, where you reached 1bn+ revenue in 7 years or less. In general, you do not learn much from unicorn companies. The majority of the time unicorn companies are created based on facts like the right idea, the right time, the right team, right execution, perfect product-market fit etc. Examples include Facebook, Uber, Whatsapp, Instagram, etc. It’s very difficult to replicate that model, and the probability is about 1 in 15m, worst than winning a lottery.

It’s a no-brainer for the founder to know which stage of the business you are in. There are only 2 obvious choices, whether to stay where you are or put the plans in place to move to the next level. Not necessarily all of them want to move to the next level, it will depend on founders preference and what you need to achieve in life. It’s perfectly ok to have a lifestyle business and be happy, at the end of the day 2m/annum is a lot of money and can bring comfortable lifestyle than many people in the world. But if your ambition is to create an ecosystem, wealth for not just the founder but for the people who trusted you (employees, investors) etc then you should think about moving to the next stage.

When you decided to move to the next stage, then you need to put plans in place how you are going to achieve it, getting prepared for the obstacles that will come in your way.

Another interesting thing I liked from Daniel’s workshop is writing a handbook showing where you are now, where you want to be in 3 years time and write down all the obstacles you’ll see in between.

This blog is just about 45 minutes coverage of Daniels workshop, I’ll try to cover the remaining learning in another 1 or 2 blog posts.