Lessons learned from expert Ryan Phelan
Whenever I sit down with the founder or CEO of a startup, the conversation eventually turns to decision-making. Startup executives make dozens of decisions about their business operations every day, whether they're about employees, products, strategic directions, cost management and the like.
The right CEO know how to make those decisions so they benefit the company and align with their acceptance of risk. That's why effective startups have many sounding boards – a committee of advisers or board of directors, peers, consultants, advisers in their accelerator or incubator program or other trusted sources.
One path to enlightenment? Probably not
Often, when talking with their advisers, executives are told there's only one way to solve a problem. The challenge comes when that solution could change how they operate their businesses in the short term.
Although it's tempting to latch onto a single solution, this often doesn't solve the problem posed by complex challenge. I see this happen often with startup executives. In their haste to make decisions and find solution, they latch onto only one option – maybe the fastest, the cheapest, the most expedient – without considering others.
In my experience, I've found there's rarely a single solution to a problem. So, you shouldn't stop once you find an answer. Don't take the obvious path. Look at the alternatives before deciding which course to take, especially if the apparent solution involves spending money, making personnel changes or altering your business strategy and goals.
Don't look just for one idea. Solicit multiple ideas from your various sources. We all have choices. Seldom is there only one path to enlightenment.
Example: How to finance expansion
Here's an example: You've decided you need to raise extra funding. Do you go for a seed round? Convertible notes? Mentor debt? Friends-and-family donations? Crowdfunding? Each alternative has major advantages as well as serious drawbacks that could alter your business plan or change your control.
List every option with the pros and cons of each. Consider how each one aligns with the level of risk you're willing to assume. Your board or mentors can help you sift through your options.
When 'slow and steady' is the right course
The pace of modern business is moving faster than ever. Investors are impatient to see returns. The accelerated pace of "fail fast" business models means you have more decisions to make and less time to make them. The pressure is on to decide – not necessarily to decide correctly, just to act and move on.
This goes against sound business practice where gains are made not by overnight successes but by incremental innovation – one small step building on the success of another. We all want to fast-forward to the end of the movie or turn to the last page in the book to see how the story ends. But that's a terrible way to run a business.
As the founder or CEO of a startup, your job is to make sure you are making the right decisions, not just making decisions to get them out of the way. Your common sense plus advice from your carefully chosen advisers will help you make the decisions that keep you on the path to growth and success.
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