First-time entrepreneur? Feeling lost? Read on…
By Naveed Lalani (Founder and CEO of Portable Boutique Inc.)
I have unwittingly made some bad decisions in my 28 years on this earth, but every day I make better ones. Reflecting on this, it is clear that making the right calls, large and small, requires certain prerequisites and a thoughtful decision-making process. These considerations are especially important in a startup, where you will never have perfect information when making a decision.
The success or failure of your startup results from nothing more than the series of small, medium and large decisions that you act on . Make more right decisions than wrong ones and your startup will be more likely to succeed. In my experience, the best startup decisions are the result of a carefully thought out process, as follows.
First, the Prerequisites
The conditions below must be met before you start the decision-making process. This is imperative, as most bad decisions are made inadvertently because some or all of these conditions are not met first.
Follow your Passions
For most world-class entrepreneurs, passion does not come primarily from the prospect of financial gain or personal notoriety; it comes from an innate desire to change the world. To make the right decisions for your startup, you must believe that if your startup succeeds, you will change the world in the ways you desire. The more your startup aligns with your passions, the more confident you will feel that you are making the right decisions for the right reasons.
Embrace the Reality
You have to be able to properly assess and accept reality. Smart entrepreneurs do not see the glass as half-full or half-empty; they see a glass with a certain amount of water. Then, they decide to drink the water, or fill up the glass with more water. To make the right decisions, you must first see things as they really are.
Practice some balance
Your mind, body, and soul must be balanced before you can make good decisions. This is perhaps the most important prerequisite, and one that most entrepreneurs brazenly ignore. Startup culture encourages over-work and over-play; to be balanced you must also be mindful of your health and spiritual life, not just stimulating your mind.
The Decision-Making Process
Only after you know that the above prerequisites hold true, you can move on to the decision-making process. Below is the step-by-step process that works for me (inspiration), but you may follow a different process.
Let’s set up a scenario and walk through it. In our sample scenario, we are trying to figure out the primary customer type to market your startup’s solution to.
Identify the Decision
Clearly identify the single decision you want to make and do not let extraneous things fog it up. In the sample scenario, you might ask yourself, “Out of my entire market of potential customers, who is my startup’s one highest-revenue-generating customer?”
Identify Your Options
Lay out the different options you have based on your own knowledge, keeping in mind the values that are important to your startup. In our example, you will now identify the different customer types that can generate revenue for your startup. And if we’re being realistic, you might eliminate certain customer types at this step as they are not feasible to reach.
Collect as much information as is pragmatic about your options. In our setup, you might research different customer segments to gain further insight into your startup’s market and reduce your blindness. Utilize emerging tools such as Clarity.fm to talk with the right experts and Compass.co to help put market data into the right context for your startup. After conducting research, you may end up eliminating a certain revenue-generating customer type, because it doesn’t match your startup’s vision or the context you are working within.
Make and Implement the Decision
Finally, the fun part: You get to make a decision and act on it! The decision should incorporate the information you have gathered, your gut instinct and your startup’s vision. In our example, you would make a firm decision on which customer segment you will target and start marketing to that segment (the marketing strategies you use may be a separate decision).
Evaluate the outcomes
Evaluate objectively if you made the right decision. Some questions you can ask in our sample scenario include: Is my startup solving a real need for this customer? How much revenue has been generated? Am I convinced that this was the right customer to target or should I target another customer? If you have balance in your life when thinking through such questions (i.e. your mental well-being is not solely dependent on startup success), you can make a proper evaluation. If you conclude you made the wrong decision, assure the prerequisites are really met and start over from step one.
In a startup, as in life, you will seldom have enough information to conclusively make the right decisions. To a certain extent, you have to rely on your gut instinct, especially as most decisions are interdependent (i.e. picking the highest revenue-generating customer may not lead to the most cost-effective marketing strategy).
When decision time comes, regardless of whether it is a small or a significant decision, make sure that you are passionate for the right reasons, thinking realistically, practicing balance in your life and following a thoughtful decision-making process. If you do these things, you will you make the right calls more often than not, and your startup will be better for it.
This post previously appeared on Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
To all the founders out there, do you have any other tips?
About the writer: Naveed Lalani is the Founder and CEO of Portable Boutique Inc., a company that creates Plug & Play Bitcoin Widgets. Previously, Naveed was Chief Strategy Officer at DonorNation.org, and Co-Founder at Rally.org. Naveed gives back by advising the Thiel Fellowship and leading entrepreneurship initiatives at the Ismaili Professionals Network.