• Mike Rogers

Strategy For Early-Stage Companies

When you try to figure out your strategy as an early stage company, it's quite easy to find all kinds of theoretical advice online put forth by economists and academics. In fact, when I was in business school we even had to create a business plan that was probably about 40 pages long. Oh, the horror!

But in the real world, when you actually have to create and implement a strategy, all those models are worthless. Now all you have to do is create a one-page business model!

The problem is that time is not your friend when you’re trying to be innovative. You need to create something that’s sellable to someone and start selling it. From that you’ll gain some momentum, learn what the market actually wants, and start iterating toward more sales in that segment or additional segments, or more features, products, and so forth.

Successful startups come from the vision of the founders and their insatiable drive to build something they want to see in the world. The path to get there is delighting the customer.

There is no model to figure that out. The way to create a strategy for an early stage company is to first figure out how to survive and second, how to succeed.

Focusing on strategy can lead to a kind of rudderless analysis of which path to take. It's not that that that approach can’t succeed—it’s just rare that it does succeed. And this is coming from a management consultant!

Start-ups are resource constrained, even if they’re venture backed. They need to pick a starting point and strive for aggressive growth. It’s unwise for them to keep searching for the best possible strategy, because they may never land on it.

When entrepreneurs and investors work together, it’s common for them to agree on milestones—for a quarter, for the year, or before the next round of funding. Both sides want to see the start-up hitting or beating those milestones. There is time pressure to demonstrate growth and progress, but those milestones aren't a strategy.

Don't confuse Goals with Strategies.

Many so-called strategies are in fact goals. “We want to be the number one or number two in all the markets in which we operate” is one of those. It does not tell you what you are going to do; all it does is tell you what you hope the outcome will be. But you’ll still need a strategy to achieve it.

Often times strategies themselves are, in fact, not strategies at all.

A real strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do. Many strategies fail to get implemented, despite the ample efforts of hard-working people, because they do not represent a set of clear choices.

Others may represent a couple of the firm’s priorities and choices, but they do not form a coherent strategy when considered in conjunction. For example, consider “We want to increase operational efficiency; we will target Europe, the Middle East, and Africa; and we will divest business X.” These may be excellent decisions and priorities, but together they do not form a strategy.

Ultimately, entrepreneurs know that starting a business is fraught with risk only they can manage. Their task is to make decision after decision in unforeseeable circumstances. As events (often determined by earlier decisions) unfold, they present opportunities or dangers that cannot be evaluated before making a choice. Launching and managing a start-up will never be reducible to a strategic framework, let alone run smoothly according to a pre-established plan.

Ted Farnsworth, a serial entrepreneur who is now the chairman of Helios and Matheson, which owns the discount theater-subscription service MoviePass, is quoted as stating, “For any new company there is only one thing to do: devise a new product and just put it out there. Then you can answer the only two questions that count: Are there customers? How much will they pay? As an entrepreneur, I’m constantly relearning the answers to these questions.”

For help with the Challenges of Growing Your Business, contact me at mike@therevenuegroup.net.

Feel free to also visit our website to learn more about the services we offer to help you Position Your Potential: https://www.therevenuegroup.net/.


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