How Startup Leaders Make the Right Decisions to Grow Their Business
I’m going to tell you something that sounds obvious but ruins a lot of founders: The key to startup success is making good decisions. And the key to making good decisions is to maintain the focus on your goals and prioritize the necessary steps to reach those goals.
I know this isn’t news to you.
However, like a lot of business advice, the devil is in the details and the details are often hard to come by. A lot of folks will preach the gospel of goals, priorities and decision making. But no one ever tells you how to deal with conflicting goals, multiple priorities and split decisions. In this post, I’m going to share with you what I’ve learned over 20 years as an entrepreneur and startup leader making decisions to give my business its best chance for success.
Solving the Root of the Decision Equation
You have goals for your business and your life. Whether or not you reach your goals comes down to clearly defining those goals and then prioritizing them above all else. Acting on those priorities — rather than just paying them lip service — is driven solely by the decisions you make.
It’s a simple cycle, but there’s a key part that’s often overlooked. The root of all business decisions always comes down to this: How much does it cost, and how often does it happen?
That’s it. That’s the game we’re playing. For every emergency, every problem, every need, every request , the data we’re searching for is money and time.
It works on the proactive side, too. For every new feature, marketing campaign, sales initiative, even new hire: How much revenue does this add, and how long until it’s profitable?
That’s the equation. Once we understand the equation, we need to solve it. And oftentimes, we don’t know how. That’s OK.
Here’s how we figure it out.
Every decision requires supporting data. Your product — along with the machine you build for customers to discover it, purchase it and use it — should be capturing data and tracking movement at multiple points during the following timelines:
First point of contact to viable customer prospect
Customer prospect journey through the funnel to purchase
Customer lifetime usage of product
Customer exit from the product life cycle
If you don’t have mechanisms in place to capture the data, build or buy those mechanisms. This kind of supporting data will be the difference between throwing a dart at a board and making educated guesses. It will also provide the means to quickly and accurately measure the results of those guesses.
The same system you build to gather data should also have multiple friction-free opportunities to solicit customer feedback.
When Making Decisions, You'll Want Feedback From the Following People:
- Prospects: While this is mostly about data gathering, there are plenty of opportunities during the sales process to get feedback on the process itself. Every “no” should have a reason attached. Every “maybe” should uncover a gating issue. Every “yes” should be followed up with a retro as to what made that “yes” happen.
- Customers: Talk to them. Email them. Call them. Chat with them. Do this at regular intervals and whenever they initiate contact for any reason.
- Former customers: I don’t take former customers off of my email list until they tell me to.
- Employees: There are two groups who you should be constantly soliciting feedback from — those who work on the front lines with customers and those who deliver the product and are responsible for product costs.
Analyze Every Bit of Data and Feedback
I don’t mean you need to put together a blue-ribbon commission to consider every request, complaint and data trend. But at the least, you should be reviewing each item and documenting whether or not you’ve already considered it so you’re not revisiting decisions over and over again.
That said, you also want to be prepared to revisit decisions when circumstances change. For example, if one customer complains, it’s an outlier. If another complains, it’s a pattern. If more complaints come in, it’s an issue. Track everything so you’re not caught off guard when outliers become issues.
The team you want involved in this regular analysis knows these areas:
Support/product owners , acting as a champion for the customer.
Development , acting as the manager of resources.
Operations , acting as the delivery and logistics costs experts.
Sales , acting as the owner of revenue expectations.
Decide What Gets the Green Light
Once the analysis team makes its recommendations, it’s time for management to answer these questions:
Where is the money coming from to pay for it?
How does it fit into the roadmap?
What are the opportunity costs?
Here is some advice to keep in mind when making these decisions.
Be authoritative. It’s always good to listen to customers, employees, board members, investors, partners, even friends. But there should be a decision-making body, led by the CEO, that has the final authority on big decisions. This authority can and will be questioned often (for a lot of different reasons), and those questions can come from all sides. So the decision should be firm and defensible.
Be honest. Most organizations, especially startups, tend to find it difficult to be totally honest with themselves about their capacity to handle more work. I try to constantly remind myself of these key points:
Always assume things will take longer than planned.
Always assume you have less resource productivity than you believe you do.
Always assume there will be emergencies
Be quick to act on sales initiatives and a little slower on build initiatives. Take more risks on the sales side by using prototypes, minimum viable products and pilot programs to prove out the market first. Be a little more cautious before you decide to build big, complex things when you’re not sure that those will pay off.
Let Everyone Know
I hate when I see companies take this painstaking approach to small and large decisions and then half-heartedly communicate that decision out to the world. There’s a foolproof process to follow here, too:
Announce it immediately. People hate getting caught off guard, whether it’s a customer, an employee, an investor or whomever. Using common sense and always erring on the side of caution, let whoever needs to know about the decision or change know about it immediately, briefly and using plain English — not corporate or tech speak.
Discuss decisions in aggregate. Set up a time and forum to discuss groups of decisions and changes with a broader group of non-public constituents (basically, everyone but the customers). This gives you time to assess the reaction and make any last-minute changes or tweaks.
Create a decision log. Startup life moves pretty fast. Keep a log in an accessible place for this larger set of non-public constituents (i.e. employees) to be able to review decisions and changes they missed or for when they need to refer to exactly what was decided and when.
Make it public. For those decisions that have public impact, let the public know in a forum outside of a self-serving press release. A lot of tech companies are doing this today and even keeping a “change log” viewable on their website for paying customers to see.
Don’t Get Paralyzed
Once you’ve got a system in place and it’s working, be prepared to make the wrong decision and change your mind based on that data I discussed at the beginning of the post.
When I say your decision needs to be defensible, I don’t mean that defense should be stubborn. There’s nothing wrong with changing your mind based on changing data. Your leadership is only impacted when you make decisions and change your mind based on gut feeling.