What Do I Look at to Manage My Company in its Early Stages?

“Though it’s cold and lonely in the deep dark night I can see paradise by the dashboard light”

Lyrics from “Paradise by the Dashboard Light” – Meat Loaf

A standard tool we develop for companies at all stages is a “dashboard.”  The concept is simple – assemble in one place data which is critical to running your business – like a dashboard, it should be easy to see and understand and not too cluttered.  A dashboard is a tailored piece as the critical information can vary by business – especially depending on your stage of development.  So, if you are an early stage company, here are some key components that should be on your dashboard:

  1. Financial data – while there is a lot that can go on here, my three favorites are cash, trailing 12 months revenue and burn rate (how much cash you are going through each month.)  The latter will give you a view of when you have to hit that old fundraising trail again. If you are generating cash, better yet.
  2. Key Performance Indicators (KPI’s) – usually tailored to each specific business.  The often include items such as unique visitors to your site, churn rates and similar non financial statistics.  As a guide, think of the key metrics you told investors were milestones you wanted to accomplish.
  3. Product development status – key milestones, latest timelines and spend versus budget.  If investors are expecting a mobile app in three months, how close are you?
  4. Organization chart –  this is both a status of filling open positions as well as a brief accountability review to make sure hires are delivering on what you need to move the business forward.
  5. Competition – where are they in product development, funding and in attracting the talent they need?  What message are they sending on social media?  Are they laying out their plans on AngelList or another “crowdfunding” site?  In addition to understanding their position, this will give you a better read of the market (customer acceptance of product; investor’s appetite for your type of company.)  In addition to the information this type of data tells you about your business, sharing it with your board or advisory board displays a level of discipline and increases their confidence in your ability to execute on your plan.  A dashboard is also an evolving tool; as you realize the critical data you need for your decisions, you should feel comfortable changing its components to meet your needs.  It is not a checklist that has to be completed; it is a tool to help you focus on what really matters.

Succession Planning Pitfalls

“That’s not how it works.  That’s not how any of this works” – from the “Beatrice” Esurance commercial

So, I was having a conversation with a good friend of mine who (like most people I know) is much smarter than I am.  He said he read my blog and actually found some of the advice I offered helpful (that is not why I called him smart.)  He then offered me some advice of his own.  He claimed that some of his best ideas came not from what to do but what not to do.  He had some theory that many of us never advance from adolescence when we do exactly what we are told not to do… it seems that remembering that is easier than keeping track of Gibb’s rules (a little shout out to my fellow NCIS friends.)  So, I looked at my practice and realized since most of my time is spent fixing situations where people did what they should not to do, I thought it would help list my top 5 “pitfalls.”  I am sure even Beatrice would appreciate them.  Here they are in somewhat descending order of importance:

Number five: getting advice from too many people.

Since this is not an exact science, it is tough to determine what the right answer is or when you know if you have done the right thing.  So, everyone who realizes you may face a succession planning situation feels free to chime in.  From barbers to friends to business colleagues, everyone has a point of view often accentuated by a success story.  Truth is, this is a process and like nuclear (or nucler) energy, it can power whole cities OR destroy them.  It is fine to listen but please entrust any actions you take to advice from the pros.

Number four: blood is not always thicker than water.

The oldest sibling; family over a faithful management member – these are standard defaults that many owners follow.  The emotion of continuing the family often outweighs an objective view of who is really the right person to succeed you.  While it might be fine to follow this idiom in personal family matters, using it incorrectly in a succession plan can result in economic harm to those closest to you.

Number three: Not considering all of the big three – family, ownership and management

The best starting point here is to put some governance around your process.  This will help ensure you keep the concerns of all of these “stakeholders” in mind.

Number two:  Getting the math wrong

Two maths here; make sure the size of the “pie” is understood by all and never take your 100% voting control and leave it to two siblings in equal shares.  This is probably the one pitfall we spend the most time trying to fix.

Number one: Waiting too long to get started; perhaps never getting to it until it is too late.

The good news here is you wait too long and you never face the problem; the bad news is the rest of us do and sometimes are acting in a void without the benefit of your insight.

So, please, though it may not be a burning platform today, get started on the process and avoid some of these pitfalls.  Trust me, you will find it well worthwhile.