One question that all start-ups must be able to answer
Having seen many start-ups 'fizzle out', Expert Impact's Sophie Hobson looks at why entrepreneurs are risking it all by forgetting to think long-term
I’ve seen, worked with and talked to innumerable founders at the beginning of their journey.
Some have gone on to grow organisations turning over well in excess of £100m. Others blossomed for the first couple of years, full of passion and promise… then plateaued. Then fizzled out.
This shouldn’t come as a surprise to you. Half of UK start-ups fold within their first five years. (Don’t worry – it gets more optimistic from here on.)
So, why don’t more succeed? Well, you could cite all the normal suspects: running out of cash; market competition; a change in customer whims; economic downturns. And these spectres should never be underestimated. They always loom in the shadows of your achievements.
But many early-stage entrepreneurs are at risk from something much simpler…
Caught up in the freneticism of the day-to-day, start-up entrepreneurs forget to think in the long-term. A long-term vision is what separates the mediocre from the magnificent. Take Jeff Bezos, founder of Amazon. His company works to a seven-year plan. “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people,” he told Wired in 2011:
“Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue.”
Building a website for your business idea is easier than you might think. Our online tool ranks the top website builders that offer free trials.
Having long-term vision is nothing new. Henry Ford is credited with making cars an everyday part of life in the US, having launched the Ford Motor Company in 1903. He was a pioneer because he thought beyond the here and now. “If I had asked people what they wanted,” he said, “they would have said faster horses.”
Having a long-term vision doesn’t mean you need to be as world-changing as these guys.
You’re not going to bomb if you haven’t got your eye on how to launch a self-driving submarine that converts into an underwater home, just in case the rising sea-levels submerge us all. (Though if you are prototyping that: kudos.)
You just need some vision of where you want to get to in the long-term. A clear, exciting vision.
Start by answering this question:
Where do you want your business to be in five years?
It sounds simple. It is simple.
But it is baffling how few early-stage founders can answer the question well, if at all. It doesn’t just baffle me, but many of the most successful entrepreneurs I’ve talked to who mentor those earlier in the journey.
Yet your long-term vision is often one of the first things that people want to know about, if they’ve built something big themselves, or invest in those who do. They want to know: where is this going? What’s the potential? And you need to know that too.
Because if you don’t know where you want to be in five years, how can you decide what to focus on now? If you don’t have a vision of where you could get to, how are you going to ignite the support you need?
So where do you want your organisation to be in five years? Now here’s the thing. You need a good answer to this question. Your answer needs to be ambitious.
Five year-vision explained
Let’s say you’re one year into running a start-up that makes funky ethical socks. You’ve generated enough sales through your website to just about support yourself.
A five-year vision to be stocked in Marks & Spencer is probably not ambitious enough; you could achieve that in the next few months. Better would be to want to be stocked by all major UK retailers, to be exporting to five other countries, and to have expanded into boxer shorts, hoodies and T-shirts.
That’s a plan that’s achievable, tangible, and a bit of a stretch. It paints a clear picture. You can see the outline of a roadmap for how to get there. (The principles of SMART goal-setting can be handy here.)
Your answer also needs to exciting. It should crystalise your five-year vision and make people want to help you achieve it. That means it needs to have a purpose. What are you trying to change? Who are you trying to help?
Most importantly, make sure your answer feels exciting to you. This five-year vision is there to motivate you – probably more so than anyone else you share it with – because you are going to hit some really crappy points as an entrepreneur.
You’re going to consider giving up, many times. So make this vision something you can see, taste, feel. You’ll be much more likely to stick to it.
Got all that? Right. Good. Spend as much time as you need working it out. After that, here’s your next practical step.
Break down your five-year goal.
Work out what you need to achieve to reach it, year-by-year. Then figure out what you need to do in the next 12 months to hit your year-one target.
Then begin and begin right away. Begin transforming your start-up into the great success you know it can be.
Sophie Hobson is the programme manager at Expert Impact, a charity that matches early-stage entrepreneurs creating social impact with some of the UK’s most successful entrepreneurs, for mentoring. Apply for a session in 10 minutes at expertimpact.com @sophiehobson