May 11, 2014

Startup Fun Formula

New client: Idea stage startup.  Clear goal.  Needs plan of Action.
Estimates of the costs to achieve the goal are provided.
Here's my reply:

This is an excellent start at gathering real numbers to use in your planning.

Of course:

"The larger the island of knowledge, 
the longer the shoreline of wonder"  


The clarity of your numbers will shape your Plan of Action.

A number that is very important, and still unknown, is
the amount of Cash you are starting with, right now,
and how much more are you willing and able to put into the adventure
over the next, say, 24 months.

Add to that:
The amount of Cash you figure you can raise from "friends and family"
either in the form of loans or equity investments,
or from selling your assets (home, car, gold bars, etc).

Plus credit cards and personal bank loan capability to finance the adventure.​

I'm assuming that the sum of those numbers is close to zero.
And that's ok, all is not lost,
it just means we need to Act accordingly.

Lots of Cash is available, from many other sources
such as Grants, and Sales of Products and/or Services to Customers.
Sales is my favorite because you don't sell equity or have to pay it back.

Another number that is missing is Time (T),
the hours per day that you, and others, will dedicate to this adventure.
Beware if your answer to this question is anything other than:
"Every waking hour, day and night, weekends,
from now until the end of Time... I am obsessed."

With constraints (Cash and Time) known,
your options become much clearer.

The next step is to lay these cash Inflows (I) out in a spreadsheet,
so you can see, by month, when and how much cash is available.

The obvious next step is to enter your cash Outflows (O), by month,
(just estimates of course).

The simple equation reveals the Truth:

Fun ($) = (C + I - O) * T

Avoid activities that produce negative Fun.
Optimize activities that produce positive Fun.

It's a game.
Sort of like a plate-spinning act.

The different plates represent different types of Activities
that are required in the startup:
Product Development, Admin, Support, Sales, Finance, HR, Board of Advisors, etc.

The founder/CEO is the only plate spinner, at first.
To scale up the adventure he must Delegate
as much as humanly possible to others who will be reliable spinners.

To attract human resources to optimize Time,
the entrepreneur uses the power of Story
to communicate the Vision, the Message, the Call to Action.
The Plan of Action.

The Story needs to be Written Down.

This is your Next Step.

Write the Story.