Most start-up founders accurately predict how they’ll make money, and how much it will cost. But there’s one thing they almost always get wrong.
I’ve built five businesses. I teach business. I regularly judge business plan competitions. And I advise both mature and start-up businesses. And there is one thing that everyone always gets wrong about a new venture: timing.
I’ve lost count of the number of spreadsheets I’ve perused, each one attempting to outline in minute detail how money will flow in, eventually exceed costs, and then head to the heavens. In many cases, the general idea is sound, the estimate of expenses is more or less right. What isn’t right is how long it will take for the company, or the product, to gain traction.
I used to advise new business owners to double the horizontal access of their graphs: imagine that incomes takes twice as long to come in as you anticipate. Nowadays, I might suggest that three times longer is a safer bet. The reason for my conservative advice derives from a few observations:
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