What to do first – advice for first time founders
Founders are often told to focus. Simultaneously, it’s not uncommon they feel constrained by the 80.000 tasks they need to check of their todo list. So how do you decide what to prioritize and what adds the most value to your company? According to Gert-Jan Strik, CFO at press agency ANP, it all comes down to planning realistically and doing a few things right.
Strik’s extensive financial and strategic experience always leads to the same advice to founders in doubt of their direction: “Get your profits from the core. Don’t come up with things that are miles away from who you are. Dig into different markets for existing products or expand in current markets with new products. Stick to what you’re good at.” Through his experience, he’s narrowed this advice down to three things: What’s the business case, always set goals and work with the right team.
While each of these pieces present a huge challenge, especially for first time founders, following these steps leads to focus and eventually results. If founders are constantly thinking to themselves, is what I’m doing contributing to any of these three things, chances of failure are minimized. We recently sat down with Strik to dive deeper into each one.
Stick to the core
Strik advises founders to think carefully about their ideas and what it takes to make them happen. Founders are often creative thinkers, making it difficult to bring their idea down to one simple use case and to move it forward from there. But you need to. “What does it cost to order or manufacture a product, deliver it and perhaps arrange returns? And will someone actually pay this amount to use your product?”
The best way is to start small. “You don’t want to buy all the machines, rent a giant space or hire a big team you might one day need. Start with a prototype and look at how the market responds. You shouldn’t aim for a dataset that explains everything you’re about to do. This doesn’t exist. You should get a feeling about what might work and how big the market is.”
Strik recalls an example from the German food deliver giant HelloFresh. “Instead of adding an option for people to buy wine, for which they would need to setup extensive logistics and would need to reach deep into their pockets to market it, customers simply got a dummy button in their account that, once clicked on, triggered a screen saying the service wasn’t available in their region yet. A quick and easy way to validate desirability.”
One positive side effect of starting small is that it’s easier to focus. “If you have 100 items on you todo list, I’ll bet you half will not be completed at the completion date you set for yourself and the other half will not bring you closer to your goals. Starting small creates a mindset that lets you focus on what’s important now.”
Always set goals
A lack of motivation is usually not the reason founders struggle with their day to day operations. They’re highly motivated to solve a particular problem. However, even though it sounds great to be working on something inspirational, not having realistic and reachable goals will kill the energy in any environment.
“Many first time founders don’t spend enough time thinking about the future. Simply because they are busy with what feels as day to day operations. Resulting in chaos and underachievement,” Strik says.
“To solve this, you should simply set a target. State any number. This will let you reconsider your todo list, because some items might not contribute to reaching your goals as much as others. It will clarify when what needs to be done. And not just for you, but for everyone in your company.”
How to set goals
“A great idea always starts with the problem it solves. Does your solution create a problem, or is it actually solving an existing problem? From that point on, you can think about how scalable your solution is and what your targets should be.”
“The most important question to ask is what does it take to keep your company alive. If you sell a product at €5.000 and your company takes €10.000 to stay afloat, what do you need to get at least three customers and start making a profit?”
“The next step is to make both short and long term plans. Many founders raise the bar early on, but lack ambition on their future plans.” Strik urges founders to dream big. “If your five year targets are way higher than what you planned before, you have to make different choices now. Does your product fit your ambition, what do you do now and what can you postpone to next year or the year after, and so on.”
Combining short and long term plans is actually pretty straightforward. If you plan on growing 10% month over month, you could also state that you’re plan is to grow 250% year over year. Or the other way around. If it’s your goal to grow 1.000% in three years, you can calculate that you need to grow 13% to 14% month over month.
Work with the right team
No matter how focused someone is or how well-thought of their plans are, “eventually it all comes down to the founders themselves. Are they passionate enough and are they capable of executing on their plans. Is the team equally balanced between strategy, sales and operations. Are they fully dedicated? These are the things that matter to investors. You will pivot with your solution, most likely, but the team needs to be excellent.”
Concentrating on building a strong team before running can feel like you’re slamming on the brakes. “You can do a lot of things yourself, mainly due to the sheer DIY applications available today, but whenever you can outsource anything, do it.”
“The one thing you don’t outsource however,” according to Strik, ”is understanding your numbers. You have to know them to realize what your future will look like. And it’s not just you. Everyone in your management team needs basic knowledge about finance, needs to know how and where you’re making your money, and must have a healthy curiosity in how their work influences the financial outcome of the company and thus the value of the company. Not only because it influences their day to day operations, but even more so, if only one person understands your cash flow, your team will make decisions on gut feeling, instead of on available data.”
One easy way of getting started is “to sit down with a team member who’s working on your finances and ask how it works. Or talk to a coach. An extra set of eyes, usually way more objective than yours, to go over some of the things you’re not familiar with.”
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