Startup Readiness Tool
This tool can be used to:
■ Evaluate and improve a founding team’s readiness to launch a business
■ Calibrate the timing of a startup effort (accelerate or delay)
■ Assess the growth potential of an already established venture
■ Provoke honest conversations about priority issues among founders, partners, and investors
■ Pinpoint areas where focused support will increase the probability of success
As a new or aspiring founder, you can dramatically improve your odds of success and happiness by evaluating and focusing on the right fundamentals early in your entrepreneurial journey. The questions in the following pages are the result of my twenty years of experience as an organizational consultant, entrepreneur, and investor. They are designed to help you assess your distinctive set of strengths, opportunities, and needs, and to identify your priorities going forward: What important decisions need to be made? What questions need further research and reflection? What actions must be taken? What issues must be addressed?
As you review the list of questions, take into account the following considerations:
■ Answering these questions may require a good deal of your time and energy. Many tools for entrepreneurs have been reduced to “fast food” style checklists, but, when it comes to the fundamentals of startup success, there are no shortcuts. The goal is not to perfect or over-analyze your idea, but to systematically improve your likelihood of success by anticipating and addressing the domains known to impact success.
■ Each founder, and each venture, is unique. Some of the questions will prove more relevant to your particular business and situation than others. Start with a quick review of all questions, flagging those that seem most timely and important based on your phase and situation. Then work through the questions you have flagged as most valuable, while being careful not to avoid questions simply because they are tough to answer, or make you uncomfortable.
■ Some questions will require more data or more reflection, or may be unanswerable at your current phase. Work to gain clarity on these questions over time, and use this framework as a tool to continually reassess your venture’s strengths and weaknesses as time passes.
■ There are five sets of questions. The first is a set of orienting questions. The next four correspond to the four-quadrant framework for new venture success introduced in Chapter Six (founder, market., math, and execution), as seen in Figure A-1.
1.
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Figure A-1. Four-quadrant framework for new venture success. |
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Describe your business concept in fifty words or less: What will you offer? For whom? What about your idea is most compelling and unique?
2. How many founders are currently involved? If only yourself, are you open to bringing co-founders on board, including giving up some ownership? Why or why not?
3. What other stakeholders/partners are involved at this point? Should they provide input into this process?
4. What is the size and scale of your envisioned business? Why?
5. How far along are you in pursuing the idea?
■ Contemplating / considering?
■ Actively planning / researching?
■ Developing the product or service?
■ Product/service is ready to launch?
■ Business is launched (pre-revenue)?
■ Business is generating revenue?
■ Business is profitable?
O6. Current time allocation: How many hours per week are you currently devoting to the development of your new venture? How many hours per week are you currently devoting to job(s) other than your new venture?
F1. Purpose. Why are you pursuing this venture? (Review the reasons listed below and check those that most closely describe you and your venture. You might also note any that specifically do not apply to you. What are the predominant themes regarding your motivation and drive?)
■ To work independently, call my own shots
■ Set my own schedule, work at my own pace
■ Freedom to set my own standards and priorities
■ To prove to myself I can do it/accomplish something challenging
■ See a better way of doing something (or want to do work of higher quality)
■ To stretch, learn, grow, get better
■ To be the best at something/to compete successfully.
Lifestyle (to mesh with a desired lifestyle outside of work)
■ To spend more time with family
■ To support the non-work parts of my life
■ To live the way I want outside of work
Higher Calling/Greater Good
■ To help people
■ To build something that outlasts me; leave a legacy
■ More meaningful or fulfilling work
■ To meet a need in society
Professional Advancement
■ To take professional skills/contribution to a higher level
■ To go more deeply into my specialty
■ To develop an idea
Social/Community
■ To work with friends
■ To create a great place to work
■ To be part of a great team
■ To have fun, meet new people
An Escape from Something
■ To get out of an unsatisfactory job
■ To get away from a bad boss
■ Feel bored, stagnant
■ No good options right now in the job market
■ Working for others no longer provides security
Financial/Wealth
■ To increase my annual salary/earnings
■ To create long-term wealth
Market Opportunity
■ Driven by a great product/service idea
■ Irresistible opportunity (a timely market or customer need)
■ See a better solution for an existing problem
Creativity/Artistry
■ Creative pursuits. . . to maximize my time creating something
■ To develop new products or innovations
■ To turn a passion into a job (hobby, skill, craft, etc.)
■ To create something—the thrill of building something
Identity (It’s Who I Am)
■ I’ve always been an entrepreneur at heart
■ To follow in parent’s or family’s footsteps
Situational
■ Take advantage of a windfall financial gift
■ Downsized or lost job
■ Friend or colleague presented the opportunity
F2. Goals. What do you hope to achieve (personally and professionally) in the short-term (next 1—2 years) and longer-term (5+ years)?
F3. Describe your desired lifestyle as you move forward with your new business.
F4. Describe any past entrepreneurial experience starting up or running a business (as founder, as member of startup team, or launching business within a larger company). How do these experiences relate to your new business?
F5. What relevant work experience and training do you bring? What is your breadth and depth of experience in the venture’s targeted field or industry?
F6. Core skill set. What do you know how to do at the highest level? What can you do better than most everyone else? How do these skills relate to your new business?
F7. What supervisory, management:, or leadership experience do you bring? (Scope and scale of prior responsibilities, time served, etc.)
F8. What sales and marketing experience do you bring? What kind and for how long?
■ Within targeted market/industry?
■ Outside targeted market/industry?
F9. What general business seasoning and work skills do you bring within the following domains?
■ Negotiation (contracts, deals, etc.)
■ Organization, planning, project management
■ Problem solving and decision making
■ Financial acumen (financial reporting, accounting, etc.)
■ Networking, developing business relationships
■ Communication (written, oral)
■ Public speaking
■ Senior executive interaction
■ Other (any skill or experience that you see as relevant)
F10. Adversity. What have been your toughest challenges, professionally or personally? How did you handle these experiences and what did you learn from them?
PERSONALITY, HEALTH, AND TRANSITION
F11. Entrepreneurial Personality, Values, and Tendencies-. How strongly do you exhibit the characteristics in the list below? (For an empirically validated assessment of your entrepreneurial profile along these dimensions, visit www. ReadyFounder. com). How well does your personality match up with the demands of your startup process? What role(s) will allow to best utilize your strengths? How can you compensate in areas where your personality is not a great match for your venture’s needs?
■ Commercially Oriented—interested in money and business; driven to achieve bottom-line profitability.
■ Conceptual—an “idea person,” continually unearthing new opportunities; an emergent learner, adaptively learning from experience and experimentation; skillfully deals with ambiguity and complexity, and has the ability to discern useful patterns from large amounts of information.
■ Independent—willing or inclined to strike out on your own; willing to stand apart from the herd.
■ Achievement Oriented—passionate, ambitious, competitive,
Driven; enjoys mastering new skills, displays a strong work ethic, and sets high standards for themselves and others.
■ Risk Tolerant—evaluates and manages calculated risks; shows courage in the face of uncertainty, and distinguishes internal feelings of anxiety from more objective measures of actual risk.
■ Confident—understands own abilities and contribution (optimistic but realistic); not easily deterred by others’ negativity or criticism.
■ Persuasive—appeals to others’ motives and values by tuning in to the needs and interests of others and adapting the message and behavior to match.
■ Resilient—persistently works to overcome obstacles and does not allow setbacks to derail them; perseveres in the face of adversity.
■ Reliable/Focused—follows through, delivering on commitments to others, as well as to themselves.
■ People Oriented—values, understands, and leverages people; possesses strong social antennae; gifted at working a room and building lasting relationships.
■ Ethical—holds self to high personal and professional standards. Words and actions are aligned; builds trust and credibility with customers, team members, and partners.
F12. What is the status of your physical/emotional health? How do you develop and maintain your personal energy and capacity (e. g., exercise, nutrition, social and spiritual, etc.)?
F13. Transition: What aspects of your prior roles and responsibilities do you want to carry forward into this new phase (will serve you well)? What aspects do you want to leave behind (will hinder you in some way)? These might include affiliations, contracts, responsibilities, behaviors, etc.
F14. What helpful relationships/contacts do you bring, including potential:
■ Clients/customers
■ Team members or employees
■ Mentors/advisers
■ Service partners (legal, financial, HR, consulting)
■ Suppliers
■ Investors/funders
■ Referral sources
■ Other
F15. What financial resources are available to you (savings, ready investors, existing lines of credit, etc.)? Describe type and amount.
F16. What minimum personal income do you need to earn on a monthly basis over the next twelve to thirty-six months to be able to pursue this venture?
F17. What are your longer-term personal financial goals in pursuing this venture?
■ Annual return beyond thirty-six months?
■ Total personal return from business?
F18. What current commitments of your time (other than new venture) will remain in place? How many hours/weeks do you expect to spend on this venture?
F19. Are family / significant others fully aware of what this venture will require?
F20. How supportive (confident, committed) are your family / significant others?
■ Actively supportive (want to help, willing to sacrifice)?
■ Supportive in principle?
■ Neutral or mixed?
■ Passively resistant (have concerns but won’t stand in the
Way)?
■ Actively resistant (might pose obstacles to progress)?
F21. Who else are you counting on to support this venture? What is their level of support or resistance?
M1. How do you define your market? What basic need or problem are you solving?
■ What value will you create for customers?
■ Are you solving an acute problem for customers, or providing a nice-to-have benefit?
■ What customer pain are you addressing, directly or indirectly?
M2. Who is your core customer?
■ Who is already using your product or service, or something like it? What’s motivating them to use it?
■ How would you describe those who are the best fit for your products or services? Why are they a good fit?
■ What is their financial/budget capacity?
■ Who are potential “marquee” customers (major relationships that will put your business on the map and drive additional business)?
M3. What is the nature of your market opportunity?
■ How large is the market? How fast is it growing (or declining)? Why is it growing (or declining)? Is it emerging or mature? Fragmenting or consolidating?
What is most compelling about it?
■ What’s happening in your industry? What larger forces and trends are driving the opportunity (economic, technological, demographic, social, regulatory, environmental, etc.)?
■ How long will your window of opportunity be open?
Why is this the right time to enter the market (or if not now, when is the right time)?
■ How broad or narrow is the market opportunity? What segments/niches/tiers will your business target?
■ Other relevant market issues/questions to address?
M4. What will be your approach to marketing and selling your offering?
M5. Who is currently addressing (or attempting to address) the opportunity, and how? What are their strengths and weaknesses?
Why do you think the opportunity is not yet fully exploited?
M6. What is your competitive advantage? Is it durable, sustainable?
What is unique about your offering (your “secret sauce")? What
Differentiates you in the eyes of clients?
M7. What are regulatory/legal concerns or opportunities regarding
This market?
M8. What fundamental assumptions about the market opportunity are most critical to your success? How can you test these assumptions?
M9. What are your most pressing questions to answer regarding your targeted customers or the overall market opportunity?
MT1. Describe your vision and business model (including options under consideration).
MT2. How will you produce and distribute your product or service?
MT3. What capabilities will be required? (Consider technology, skills, processes, “know-how,” etc.)
MT4. What capabilities/skills should you own vs. outsource? Why?
MT5. What resources/investments will be required toward what expected revenues, along what timeline? What are strengths/concerns with the financial projections?
MT6. What are projected cash levels (best-, mid-, worst-case) over time?
MT7. What are key financial indicators to measure and manage going forward?
MT8. What financial controls/systems are in place, or planned?
MT9. What are highest-probability/highest-impact risks to the plan? How will these be managed (preventive, contingent actions)?
MT10. Based on your financial picture and personal needs/goals, what total startup funds are necessary to get the business off the ground?
■ Is this enough to cover startup costs in a worst-case scenario?
■ Is this enough to cover your minimum short-term income needs?
MT11. How much of the required funds are currently available to you for your use? What shortfall exists, if any?
MT12. What are available or prospective options for filling the funding gap?
MT13. What are your next steps toward exploring and securing the right funding sources?
E1. What skills/expertise (beyond yours or your team’s) are required to accomplish your near-term and long-term objectives?
E2. What talent and expertise are needed to supplement your own? Where are your most pressing talent gaps? What is your planned approach for filling out your team?
E3. Do you have specific candidates in mind? Are they the best available? How are their skills complementary to yours?
E4. What service partners will be necessary and what are your best available options?
■ Legal
■ Accounting/Finance
■ Technology
■ Marketing/PR
■ HR
■ Other
TECHNOLOGY
E5. What key processes and systems are required to develop, sell and deliver your products/services?
E6. What is your sourcing plan for key processes and systems?
E7. What partners may be necessary to provide, build, or support them?
TEAMWORK
E8. Who are your key relationships, inside and outside your business— relationships that must work well for your business to thrive?
E9. Are team goals, roles, and accountabilities clear? How strong
Are relationships, trust, chemistry?
E10. What management practices (regular meetings, team-development processes, social events, etc.) are in place for continual strengthening of the team?
INTEGRITY OF COMMUNICATION
E11.How open are you to considering new ideas or data that might contradict your business plan? Who do you utilize as a neutral sounding board or devil’s advocate (someone who won’t sugarcoat an opinion and will push back on your thinking)?
E12.To what extent are tough or awkward issues raised and discussed among key players (versus feel-good conversations)? How are differences of opinion raised and resolved? How is bad news handled?
E13.How open and transparent is your business plan and operation for those who need to know (key partners, investors, team members, etc.)?
E14.What important issues seem undiscussable? Why?
E15.Motivational Alignment. What are the most important interests/ goals of each key venture player (partner, team member, major customer, etc.)? How well do these align with the interests/goals of the business? Where is misalignment? What needs to be done to correct?
E16. Capability Alignment: Are the right people in the right roles? Are key players deployed in ways that capitalize on their strengths and cover for weaknesses? How might capabilities be better aligned?
E17.FinancialAlignment. How do compensation arrangements incent key members and partners to give their all in support of the new venture’s goals? In what ways can salary, commission, bonus, ownership, and benefits structures be tweaked to maximize alignment?
E18. Time Alignment. What are your (or founding team’s) top priorities? How well does your use of time align with these priorities? Where is misalignment? How should your time be reallocated, and what obstacles must be removed for this to occur?
