The last two percent

By Fiona Boyd |

Late last year, one of my business coaching clients asked me what was the best piece of advice I could give him on his startup. I’m not actually one to give other people specific advice on what they should do, but in having the Arts Hub adventure with David Eedle, there were plenty of key principles that we learned that I doubt you’ll be able to find in any business book, and our belief is that we should at least share some of these learnings with those who wish to tread a similar path.

The first thing I told this client was to narrow his focus down from the twenty plus objectives that he was looking at, to between one and three things that could form the bedrock of his new business. There’s more about the issues around trying to get the right focus in your business in the post “The One Thing”.

Over the holidays though I thought harder about this client’s position and business proposition and realized that once he was underway he was probably going to face the other big issue David and I faced during the Arts Hub journey, and that is what I call, ‘the last 2 percent’. We’ve written in detail about what the last two percent of issues were that held us back from having the ideal business in Chapter 4 of our book Niche Content Millionaire – and what we needed to do to overcome these.

But the notion of how much energy you should expend on finessing the final bits of your business is worthy of some thought.

Sort the 'last 2 percent' and the sun won't be setting on your startup.

Anyone who has started a new business knows that once you get going, and getting going in itself often takes much more energy than you’d expect, that if you’ve got your fundamental assumptions right, things go reasonably smoothely in the early phases of your business. You’re fuelled by the excitement of the new venture, the potential of bringing a new product/service/way of doing things to market, surprised and then delighted when customers start to use what you’ve created and ecstatic when you get some feedback, and in those early days, all feedback is good. It shows there’s someone out there who’s noticed what you’re doing and who cares enough to say something about it.

In time, your burn rate reduces, that’s the amount of money going out the door in relation to the money coming in. In the very early days your burn rate will be high, unless you’re starting with no budget whatsoever, and if that is the case, you’ll be putting in an enormous amount of sweat equity. If things work out for your startup, there’ll come a point where what comes in is greater than what goes out and you can at this point consider your business to have become ‘cash positive’.

Now, I’m not saying these early days are not stressful and don’t require an enormous amount of effort. You may come to believe that you’re not just the company founder, you are also a counselor, parent, financial advisor, and problem-solver extraordinaire. And if you were running a department for the government or for someone else, you’d just delegate most of your problem-solving to someone on your team, but as this is your own startup, and your business is so new and unknown, you tend to do most of the crisis-solving and fire extinguishing yourself.

But for us the really dangerous period came when everything on the surface was working fabulously well, our business was firmly ‘cash positive’ and David and I started to truly delegate issues and problem-solving to those on our team. We no longer felt we had to do it all. There comes a hazardous time when exhausted owners start to corporatise their business and set up units or areas to their business with a staff member in charge. You have a plan, each leader knows their gig and what’s expected of them, they take over and by and large, things work.

However, at this point we’ve noticed that inertia tends to settle in. What in the early days would just not be tolerated, say in dealing with a customer issue, becomes commonplace. Decisions are made that lead to systems being set up because of need, rather than research being undertaken as to the best way to meet that business need. If you’re the founder of a new start-up you make sure that every item of expenditure leads to value into your business, or value to your customer. There are no such things as budgets to spend freely just so a department or business area can function – if the expenditure can not be shown to enhance revenue, then it doesn’t occur. But if you’re a Team Leader you have no such investment in expenditure being tied to revenue, and we’ve noticed that whenever you get people in charge, you get someone lobbying for a bit more.

David and I got Arts Hub to the position of highly-functioning business in around three years, and beyond that all the work on the business was about finessing the final bits. At times we didn’t really have the energy to do the necessary tidies and would let an inefficient business practice go unchecked, until it caused a problem for us a bit later down the track.

What I would say is that when you start up a new business, don’t forget the amount of time, energy and devotion that will be required at the point where it’s all working fine and the business makes sense. Crossing the last t’s and dotting the last i’s are really important and go to the heart of why you started in the first place – you wanted to provide something really good to the market. If as founders you’re exhausted, then have a think about hiring someone to do the nit-picking and quality and cost control that you used to at the outset. Once things are working well, it really is time to hire a General Manager and to look at what should be the next phase of your business. If you don’t close off your last ‘2 percent’ issues you’ll find yourself holding back on the next stage of the business, which is where it gets really exciting, and that’s the growth phase.

The ‘last 2 percent’ is a notion that plagued telecommunications companies for ages as well, when they would describe the most difficult bit about the business was where the copper wires connect to the house. It’s the last bit that really counts the most, and it’s not usually where most of the effort tends to get expended.

Life is a lot like business and I suspect we all have ‘last 2 percent’ issues lurking around in our lives, ready to give us a really good bite on the backside when we’re most unsuspecting. I don’t believe you can be prepared for every contingency (though you can plan like crazy), but I do believe it’s worth putting a bit of time aside to close out any lingering issues you have in your life or your business. Is there a better way, should this issue just be dumped and involved parties notified, what’s the fastest way to achieve resolution, and what’s required to achieve that? Spend a bit of time every month to closing out the ‘last 2 percent’ issues and you’ll never need to know what it feels like to hold yourself or your business back from the exciting next step.

Photo: Flickr ronnie44052

Note – Fiona Boyd has a couple of coaching slots available for business and startup clients in 2010. Email Fiona@collectzing.com for more details.

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