Ask the Expert: Dealing with the certainty of changeBy MARK KAPLAN
Special to the Union Leader
July 09. 2017 10:00PM
“Nothing remains constant except change itself.”
Though the author is unknown, the concept itself is well known. In a startup sense it is a given that innovation and disruption are all about change — changing the way business is done, changing the behavior of consumers, changing our daily lives. Change isn’t easy, things don’t always go smoothly, and in a company everything isn’t always up and to the right (growing fast).
Companies go through cycles of change, and understanding how to deal with adverse cycles effectively is often critical to survival and ultimate success. This is the case in managing the operations of the business at critical junctures, as well as dealing with the potential emotional turmoil that accompanies difficult times. In both regards what has happened to date impacts what to do and how to succeed.
Considering other ideas
In addition to complementary skill sets, one of the reasons startup founders have and find partners with whom to work is so they can lean on one another in tough times. Partners understand the struggles of each day working toward success, creating a bond that makes the highs and lows a shared experience. However, stress often doesn’t bring out the best in people. So at those moments it’s important for partners to have a positive attitude as they exchange ideas about the path forward. Partners who can support one another bring strength to each other and the company. In tough times you could feel very glad you have a co-founder/partner.
If there aren’t partners, it’s helpful as a founder to have developed relationships with confidantes/advisers/mentors — experienced business people who can provide support and help maintain a level of optimism. Meaningful advice and guidance is only one part of their role. In lieu of a partner, advisers (particularly those who have been involved in startups) can provide an emotional crutch.
But maintaining an optimistic view is just the beginning at difficult moments in the life of a company.
Assessing the situation
When a company is in difficulty a careful assessment is key. Start by understanding what resources are available, and find and understand the root cause of the problem. It may be related to technology, personnel, market, customer concentration, sales pipeline, economic conditions or a myriad of other possibilities. Don’t overlook any possibility, and don’t focus too much on what may be the easy answer. Ask many questions.
A thorough assessment phase will also clarify those things that are controllable and those that are not. Specific identification of areas in which action can bring results allows a company to intensely focus, rather than spending time and attention on activities that will have little or no impact.
Assessing the company’s cash availability and cash flow status is of utmost importance. The ultimate survival and success plan must be aligned with the resources available to execute it, and of course depending on the company’s stage cash is king. Know how to manage it well.
Planning is important all the time, but when things are going well for a company there is room for error. In a fast-paced environment this often allows for more action and less planning. It can be hazardous, but with enough successes based on action, progress can still be very strong. This is not the case when times are difficult. Action without assessment and planning can quickly drive a company to failure.
With a solid understanding of the situation, the obstacles to overcome and the resources available, a plan can be developed. Among the key questions to answer in planning:
• Time — how long does the company have to extract itself from difficulties?
• Resources — how much and when should these be applied to various parts of the business?
• Reductions — are there activities that should be curtailed or eliminated, perhaps to extend time and increase resources; personnel — are the right people in place and motivated to take on the challenge?
• Milestones — how is progress going to be measured over short periods of effort and accomplishment?
The answers to these types of questions will help frame the plan from the short term to longer-term success. In a more severe problem situation planning short term incremental progress is required, so that too many resources aren’t utilized before measurable progress is evident.
Even with optimism, unfiltered assessment and good planning, success is not assured, and things continue to change. In fluid situations modification of plans is often necessary. Following a good plan of action makes less and less sense if it is not translating into expected results, hence the need to measure progress frequently. Fluidity requires short cycles of constantly reviewing and iterating plans by stepping through the same questions in the process frequently.
Success is never assured, but having some challenges is almost always assured. Preparation to deal with those situations can reduce the hurdles and increase the prospects for success.
Mark Kaplan , CEO of Alpha Loft, has 30 years of executive, financial, venture capital and investment industry experience.