Jason Rose is an executive director of investment bank Concept Equity and a director of adboss.com.au.
What is your best indicator of progress?
One of the hardest things for an entrepreneur to know is whether their start-up is making progress.
You might be thinking, well, that’s what KPIs and spreadsheet models are for, and in a sense you are obviously right.
However, I believe that these black and white measures are often less useful for early-stage companies.
I’m not suggesting you shouldn’t write a business plan or be constantly benchmarking your performance. Of course you should.
What I am suggesting, though, is that you should broaden your perspective on the definition of success.
In my experience, one of the biggest indicators of progress is the number of problems you are generating.
Your business started off as an idea that you road-tested in your imagination for months or even years.
You may have also consulted various experts or confidantes, but even so, it was still all just theoretical.
As General Colin Powell famously said, “No battle plan survives contact with the enemy.”
That is also perfectly apt for business plans.
From the very moment your business transitions from concept to reality, it will run into problems.
That is what progress looks like: problems. If you are not generating them, you are not progressing.
I’ll give you an example from my own experience. My partner and I developed an idea for a media-buying website.
After months of conceptualising, we finally developed a business plan and a sketch of how our system would work.
That’s when the problems began, starting with who would build it for us.
We settled on a company and spent months in contract negotiations, only to fail to agree on terms.
It was a major setback – and we had to frantically find a new development company, which we eventually did.
And the lessons we gained from our original contract negotiations helped speed up discussions with our new partner.
Without wanting to bore you (or remind myself of the frustrations of being in development), we then went on to suffer month after month of problems: missed deadlines, substandard work, project managers going missing and so on.
In terms of hitting KPIs, we got far closer to hitting each other. But that is reality. That is what turning an idea into a website and then into a business involves.
Yes, by the time we went into beta our problem counter was hovering in probably the thousands.
But each problem is like a sculptor chipping away at the rock to reveal the statue that lies beneath. It’s the necessary pain of creation.
We now grapple with entirely new problems such as growing our client base, tracking our sales, developing new aspects of our website and so on.
We are running into countless problems and that’s fantastic. Each problem is a further sign of progress.
That’s not to say it’s fun. It’s exhausting and nail-biting and often deeply frustrating.
But what it means is that our previous problems have been solved and that things are, in the words of our PM, moving forward.
Please don’t misinterpret what I am saying. Don’t ignore financial and other key metrics.
If you do, you will go out of business. Quickly.
What I am saying is that another useful indicator of whether you are progressing is captured in how many problems you are encountering.
Bring them on! They mean you’re getting somewhere.