Dealing with Entrepreneurial Unknowns: When your Magic 8-Ball is Hazy
If current political events have taught us anything, it’s not to assume outcomes. Apparently not even highly trained expert pollsters and pundits can predict the future so how can we as entrepreneurs know what our new businesses are going to do? Three year income and cost projections?? I’m hoping we can still pay salaries three months from now! If this is how you feel, you are not alone. Yes, we’ve all had to (or should have) written our business plans. But three years of accurate forecasts? Well, let’s all take a deep breath and hit the reality button.
One: Data is your friend. No one can 100% predict the future. The best we can do is look at similar businesses with comparable models, factor in key data trends that are critical for whatever business you’re starting, and then make best informed guesses. For example, if my business model depends on population growth or number of people who own houses, I can find open data sources that tell me that. If my success depends on people who will suddenly develop a love for the color magenta, maybe not so much.
So, where do you find this data? Most metropolitan areas collect demographic information on a regular basis. Many are now releasing it to the public to help spur business development. For example, we are based in Philadelphia, PA. A quick Google search can let you know what’s available: Philadelphia Data. Not sure if your area does the same? Call your Chamber of Commerce. Statistics and data analysis not your thing? Find help at the Small Business Association or find an onDemand expert resource on a site like SweatEquitE.com
Two: Give yourself permission to be wrong (temporarily). Revisions and “pivots” are not bad. On the contrary, they’re often very necessary. A business plan is an ever developing, flexible framework, not a hard and fast rule book. Definitely write your plan with a set of goals in mind, but, if you find out your assumptions are wrong, that’s OK. You don’t have to double down because you’re afraid to be wrong. Doubling down on a path that you already can see is not panning out, means doubling down on losses. That’s never a good idea.
Part of being a leader is knowing when to pivot and when to dig in and fight harder. Don’t confuse predictions for fact. If your trends show you’re moving in the wrong direction, by all means change! Business forecasting accuracy is a continuous learning process.
Three: Consider the big picture when making decisions. Know what you’re dealing with and how decisions are interrelated. When you’re the boss, you’re bound to make mistakes and that’s ok. Mistakes are opportunities for learning and will definitely happen. If you haven’t made any yet, you’re not stretching your business enough.
Short term “wrong” Is not a long term death sentence. So, before you panic and potentially over compensate with a partial decision, keep the “wrong decision” in perspective.
Do an accurate assessment of impact – is it an inconvenience or a crisis? Who does it affect – employees, customers, vendors? What is the full impact – people, performance, profit? Understand what you’re dealing with and then make a good plan for resolution. Afterward, do a recap so you understand the root cause and how you can prevent “wrongs” in the future.
Business is a learning process, so remember you are your own best crystal ball!