When I meet with a client planning a business, the first question I ask is “what are your goals?” So simple, but it’s amazing how many people get started before they think through their goals. Setting goals gives you a sense for whether all the hard work could payoff in a way that makes it worthwhile to you. Goals also frame the way you’ll approach raising capital (e.g. if you are looking to build a modest sized business, rule out venture capital). And of course, without goals, it’s tough to measure your performance.
Here are my goals:
- Keep startup costs below $25,000 for the first 3 months of operations, and again for the second 3 months (if I get there). I’m bootstrapping this. In part to practice what I preach – stay lean, move fast, and take a phased approach to maximize flexibility and reduce risk. I’m also bootstrapping out of necessity. I have a new baby at home, got burned by Madoff, and have most of my assets tied up in illiquid investments. Not ideal, but it sure does light a fire under my behind. I won’t rule out raising capital in some way or another down the road, but first I want to get some traction and understand the dynamics of the business.
- Generate revenue within 3 months, and reach break-even within 6 months. This goes hand in hand with bootstrapping. I don’t want to empty my savings account into this venture. Starting TODAY, the meter is running.
- Build a business that can generate over $1MM in revenue / yr, profitably, within 3 years. I’d like the company to throw off enough cash so I can support my family and save for the future (btw I live in NYC so that’s a lot).
- Maximize the chances of success. I’ve tried swinging for the $100MM fences, and it’s a rush. But right now I’d rather have a 90% chance of building a business with modest revenue and profits, than a 2% chance of hitting it big.
- Create assets I could potentially sell down the road. That means I need an exit strategy – a sense for what this could be worth, to whom, and when.
- Work with a small team of people I like and relate to, within a flat organization. I don’t want to spend my time managing a big team. I’d rather have a few key lieutenants or partners.
Did I leave anything out? Screw anything up? What do you think?