As of late I have heard many allusions to “driving the car & changing the wheels at the same time” from clients and their prospects. This automotive metaphor depicts today’s business realities. Startup businesses & other hyper growth operations that feed off of some incoming revenue to fund operations while product branding coalesces and a market niche is attained must be managed with a high level of flexibility to avoid failure. As well, a high level of entrepeneurial expertise is required to successfully exercise that flexibility “in mid air” while the cash register is ringing.
Flexibility means changing the business plan and any of its components (including the sales plan), as required, to tune performance as the business chugs along. The key benefit of committing to this approach amounts to sequestering authority and business ownership with the CEO and any early stage investors. After all, the funding required to fuel hyper growth, at least in part, will be provided by the revenue resulting from sales. This self reliance obviates the need to look for substantial funds from outside sources who may have plans and intentions that run contrary to the plans of the CEO and founders.
However, this approach comes complete with substantial risks. For example, a change in the product plan can result in “orphaned” products that will remain removed from the broad product offering. These orphans, forever relegated to the periphery of the renovated product offering will, nevertheless, require complete support to ensure that early adopters (in the form of paying customers) are not disappointed by their purchase. Therefore, the burden on support staff will be increased should a substantial change in the product plan be required.
With regard to changes in the sales plan, realigning territories, changing commission structures, etc.can wreak havoc with the sales force and, therefore, threaten the reliability of forecasts and plans. These plans and forecasts typically provide the cornerstones of revenue assumptions; therefore great dexterity must be exercised by the CEO to ensure that required changes are successfully effected with minimal disruption.
In sum, a CEO should think long and hard about an early entry into targeted markets. A successful execution of radical renovation to product, sales & business plans while doors are kept open for customers to enter and place orders requires the careful dexterity of an open heart surgeon. One wrong move with the scalpel can result in the death of the business. CEOs do well to proceed with caution.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved