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- Why do investors care about execution strategy?
- How far past launch should the execution strategy go?
- Choosing the right milestones
- Staffing plans vs. financial staffing models
- Addressing risks
- Establishing KPIs before launch
- Including industry-specific elements
- Creating projections
Skill Level Beginner
- "A goal without a plan is just a wish", and I want to make sure your business is not just a wish, but a reality, and that's what we're going to talk about today. It's actually making it a reality. Your execution strategy is that plan. That's how it all kind of comes together. It's the nuts and bolts of launching your business and that's what we're going to talk about. Not just launching your business, but actually running your business as well. So I want to make sure that we answer this question: how are we going to get this business up and running? The answer to that question is your execution strategy. And it's very important that we understand kind of what level we need our execution strategy to be at. It's a pretty high-level look at how you're going to execute, not necessarily all the individual steps that you need. I actually like to think about the difference between an execution strategy, which is more high-level, and an execution plan, which is really more of the detailed step-by-step things that you need to do, so you can kind of separate and put those into two different buckets. What steps are needed to bring your product or service to market? Very important. How are you going to gain momentum towards viability? What is your timeline to make all this happen? Who are you going to get to do this? Who are you going to get to help you do this? And how are you going to measure the progress and the results? And these are all the different elements that start to make up what we call an execution strategy. Now I want you to know that an execution strategy is somewhat customized to each individual business as you begin to write and work with your business plan, that there are some standard elements that I want to make sure we include, and we're going to go through those in detail. And then there's kind of some optional elements depending on your business that we may include or may not include, and that's absolutely your choice in terms of doing this. So I kind of think of putting this together a little bit like some puzzle pieces that maybe not every element applies, but I do want you to evaluate the top five elements that I want to make sure that you include here. What we're trying to do is create a complete story about how you're going to execute this business. That's what we want to tell: we want to tell a story, a compelling story, and stitch all these different pieces that I'm going to go through in just a moment together into one cohesive plan. There's a few things I want you to keep in mind as you're building out your execution strategy. First thing is your timeframes. Your timeframe actually may vary, so it depends on how long should your execution plan cover. Should it be three months, six months, two years, five years? Well, it really depends on your business in terms of how far you take that out. Let's take a couple of examples here. Let's take a technology business. You know technology moves very, very quickly, so if I was running a mobile app business, as an example, I probably would take my execution plan out maybe 18 months or so. I wouldn't go much further because technology's changing, the markets are changing, it's very dynamic. How about another example which is a little bit more of a traditional business: a winery? So first thing is is that wineries require significant capital investment and about two years before you get your first harvest. Then you have the age of the wine which can take another five to seven years before you actually start earning revenue. So this can be a long-term, so your execution strategy might actually have to go out nine or 10 years, believe it or not, and bigger milestones to actually make this thing work. Determine the right level of detail. This is not a tactical document. This is not meant to be a step-by-step analysis of exactly every detail of the business. The trick is you got to create a balance and so you want to keep your execution strategy fairly high-level so investors look at it and say, yeah, this entrepreneur really understands what it takes to execute this business. You want to make sure you have significant milestones embedded in there so they can actually track your progress. Those are the things that they want to know. What they don't want to know is every little detail it takes. That would blow them away. You might want to write a plan, an operational plan or even an execution plan, with a lot of detail, but not something that you might share with investors or other people looking at your business. That's kind of important as well for you to understand. Now I want you to also consider that pre-revenue businesses, businesses depending on what stage of business you're in, determines the level of detail that you need to be at. So, in startup businesses, again, we're going to keep the execution strategy fairly high-level. With a post-revenue business or a business that is actually going and making revenue and has their product out, you might actually need a little bit more detail in your execution strategy if you're going for a second or third round of funding because they're going to want to know more details about how you're going to execute the next phase of your business as well. So, again, it also matters where you are in terms of your business cycle, in terms of how much detail you want, but remember: be balanced on this. Let's start by looking at what I call the required components, and the required components really are those components that I want to make sure that are in your execution strategy. Then, in addition, there are some optional components that you can kind of put together. So let's get started with the first one. The first one we have is milestones. Milestones, really important. These are the key actions or events in order to get your company launched. What are those key milestones that get your company launched? And then moving forward in an operational sense going forward, and that's when we really want to get down. Now milestones typically have specific dates associated with them or date ranges associated with them. That's a very important component to have a milestone. You can't just put something out there and say, put a goal out there and say, oh, I don't know when it's going to get done. 'Cause it really isn't then a milestone. Want to make sure I clarify one thing. There's a difference between a milestone and a product roadmap, and some people get these mixed up. Product roadmap is just looking at your product. Now there are milestones in your product roadmap, but really, a milestone in what we're talking about is it relates to execution strategies about company-wide events that need to occur, including your product development, but not just your product development. It's a list of those initiatives and I like to think of the initiative as the thing that you need to do in order to get to the milestone. So I always like to put down initiatives. I think they're very important because they drive you. That's kind of your goal: what do I want to achieve? What do I have to achieve? And the milestone is the actual achievement of that. So the initiative propels you to actually achieve the milestone. That's what milestones are all about. The next required component is staffing plan. Now the staffing plan is actually a little different than your company overview, where you actually went through your executive team. The staffing plan is actually going to say, what is all the staff that I need in my business over the next six months, 12 months, two years, or even further than that? Now staffing plan is critically important as we start to talk about it because this is going to feed into your financial plan, and feeding into your financial plan, you can't actually do a financial plan which is required for funding unless you do a staffing plan 'cause, for most businesses, staffing is actually quite a lot of money and so investors are very, very keen on making sure that you have this down. So what a staffing plan does is it actually summarizes all your positions that you need. You're able to actually write job descriptions and other things from your staffing plan as well which I actually really like. Our next one is risk and risk mitigation, and this is a really important section in my opinion, probably the most important section, I think. What it basically covers is your potential threats in the future of your business, so this could be a physical threat, could be market changes, could be economic changes. It could be anything that would threaten the business and investors want to understand this. Now you, as an entrepreneur, you're like: I don't want to talk about threats. I don't want to talk about anything negative in my business plan. Actually, this is a really good thing to talk about because this gives you credibility. This says that you've actually thought through your business far enough and that you have a level of preparedness that is going to make your business work because every business has threats, so make sure that you embrace those threats and then you actually have a risk mitigation strategy for each one of your risks. When investors see that, they're like okay, now I calm down, I understand there might be a risk, I calm down and make sure everything's okay. Our next component is key performance indicators or KPI's, and these are the specific metrics that measure the success of your business, and this is really important. They tend to go on, they go beyond financials, and they also tend to be industry-specific so you've got to look inside, maybe do some research on what are the key performance indicators in your industry as well. They measure yourself against the competition and that's why you have to look at the industry because competition is so very important, so there are things like conversion rates, maybe on an e-commerce site or in a retail store, sales per square foot, same-store sales. And there are many different types of key performance indicators. Those are just a couple of them. And our final component is the startup plan. Startup plan is also very important because what it allows us to do is really understand all the startup costs that we need to do in order to get to revenue, and that's really important. Now, you say, wait a minute. All this information is already in my financials. Why do I need to do another plan for it? Because it's actually just a summary. Right now, all of that information is buried into your financials, so you want to bring that out. The reason you want to do that is because investors really care about: how are you going to get to revenue? How do we get to the first penny, first dollar of revenue? That's really important. So don't worry about it being redundant. It's a nice summary for investors, so this includes really big things such as store build-outs, building out your website, app development if you're a tech business, equipment that you need to be purchasing. These are big elements or items that are kind of grouped together, so think about that as you're working through your startup plan. Now let's pull it all together now and understand how this works in a couple of businesses.