Startup: An Insider's Guide to Launching and Running a Business by Kevin Ready
Book: Startup: An Insider's Guide to Launching and Running a Business by Kevin Ready
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Authors: Kevin Ready
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in his case. After a couple of years of worry, his response to that single point of failure was to double down and increase his volume with the client. He decided that his best path was to make sure that the client is as dependent on him as he is on them. This way of addressing the single point of failure has worked well for him so far: profits and volume are up. Now that he has stopped worrying about finding other customers, he is able to focus more of his attention on that one customer and lock in that relationship. Meanwhile, since he is consciously aware of the risk, he is banking as much profit as possible as a hedge against a future fluctuation in the fortunes or requirements of that single large customer.
Takeaway: Identify single points of failure. Find a way to manage them before they bite you in a way that you can’t recover from. I have seen entire companies and years of work lost to this. Don’t let it happen to you.
_________________
Specific Intention
In business, it is really important to have a specific intention behind everything you do. If you are going to spend money on marketing, what specifically are you trying to accomplish with the investment? If you’re going to hire a new employee, in what specific ways do you plan to benefit from having another person on staff? If you’re going to invest money and buy new software, in what ways do you think your business will be more efficient or in what ways will value be created?
An analogy that I like to use is playing pool. Most of us have played the game at one time or another. The first time I ever really played was in college. I occasionally found it frustrating trying to figure out how to make the balls do precisely what I wanted, and I could succumb to the temptation to just hit the cue ball as hard as possible, thinking that at least something would end up in a pocket. The fact of the matter is that just hitting the ball hard in the absence of a specific intention is one of the worst options available. As a beginner, in the process of evaluating the best ways to win, the just-hit-it-hard strategy is always there, waiting, as a fallback option when you don’t know what else to do. In my case, however, it did not take long to realize that if I wanted any reliable chance of getting what I wanted, I really needed to have a specific intention: eight ball in the corner pocket.
In business there are lots of similar situations. For example, experience has shown me that you can throw money at anything. You can buy an expensive phone system. You can purchase new furniture. You can hire extra salespeople. There’s no end to the ways that you can invest money in your business. I want to reiterate that point:
There is no end to the ways in which you can invest money in your business.
A corollary to this is that most of the ways in which you can invest money in your business are not going to have a clear positive outcome. You have to be very selective of where every dollar goes in your operation. That selectivity comes from specifically defining your intentions before you move forward with any investment.
Often, when you get into an honest evaluation of an investment decision, you will find you don’t need what you thought you did, or that you can function at 100 percent with much less than you thought at first blush.
A Waste of Cash, Time, and Energy
At a dot-com startup where I was an executive, the investors behind the operation had a history of getting personally involved with decision-making and day-to-day operations. On one occasion, they decided to purchase a $100,000 phone system. That thing was complicated. It probably seemed cool to imagine what such a system could do, but it was completely impractical and way too expensive to be justified for the still-money-losing operation. This is an exampleof just hitting the cue ball as hard as possible and hoping something good happens.
The business need was simple: to have a phone with a voice mailbox
Takeaway: Identify single points of failure. Find a way to manage them before they bite you in a way that you can’t recover from. I have seen entire companies and years of work lost to this. Don’t let it happen to you.
_________________
Specific Intention
In business, it is really important to have a specific intention behind everything you do. If you are going to spend money on marketing, what specifically are you trying to accomplish with the investment? If you’re going to hire a new employee, in what specific ways do you plan to benefit from having another person on staff? If you’re going to invest money and buy new software, in what ways do you think your business will be more efficient or in what ways will value be created?
An analogy that I like to use is playing pool. Most of us have played the game at one time or another. The first time I ever really played was in college. I occasionally found it frustrating trying to figure out how to make the balls do precisely what I wanted, and I could succumb to the temptation to just hit the cue ball as hard as possible, thinking that at least something would end up in a pocket. The fact of the matter is that just hitting the ball hard in the absence of a specific intention is one of the worst options available. As a beginner, in the process of evaluating the best ways to win, the just-hit-it-hard strategy is always there, waiting, as a fallback option when you don’t know what else to do. In my case, however, it did not take long to realize that if I wanted any reliable chance of getting what I wanted, I really needed to have a specific intention: eight ball in the corner pocket.
In business there are lots of similar situations. For example, experience has shown me that you can throw money at anything. You can buy an expensive phone system. You can purchase new furniture. You can hire extra salespeople. There’s no end to the ways that you can invest money in your business. I want to reiterate that point:
There is no end to the ways in which you can invest money in your business.
A corollary to this is that most of the ways in which you can invest money in your business are not going to have a clear positive outcome. You have to be very selective of where every dollar goes in your operation. That selectivity comes from specifically defining your intentions before you move forward with any investment.
Often, when you get into an honest evaluation of an investment decision, you will find you don’t need what you thought you did, or that you can function at 100 percent with much less than you thought at first blush.
A Waste of Cash, Time, and Energy
At a dot-com startup where I was an executive, the investors behind the operation had a history of getting personally involved with decision-making and day-to-day operations. On one occasion, they decided to purchase a $100,000 phone system. That thing was complicated. It probably seemed cool to imagine what such a system could do, but it was completely impractical and way too expensive to be justified for the still-money-losing operation. This is an exampleof just hitting the cue ball as hard as possible and hoping something good happens.
The business need was simple: to have a phone with a voice mailbox
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