Ask Christa! Business Basics Series (6/6) - What Areas of a Business Do Founders Overlook? (S3E31)

Introduction and Listener Question

Hi everyone and welcome to Ask Christa! the place where you can ask questions about how to work through business challenges and workplace issues. I'm Christa Dhimo and today’s listener question is the sixth and final episode in my Business Basics series. I selected this question from a variety of similar questions focused on the blind spots of founders. The listener question is: “What areas of a business do founders overlook the most?”

Here's my short answer: An executable plan, which is a fancy phrase for: knowing what you’re doing and how you’re going to do it!!!

Many Founders Have Big Ideas (but little care or want of building the plan for the ideas)

Founders have big ideas, which is good—you have to start somewhere and have enough energy and belief in what you’re proposing to make something of it, but what I’ve seen the most is a pronounced lack of details to execute. And I’m here to say…. Founding a company is ALL about the plan and execution of that plan. 

I’ve heard founders try to tell me that a business plans sounds “too corporate.” Or that they don’t need a plan, because “it’s a startup!”

Hah hah hah hah hah….

OK… whatever you say…

Quick Review of Supply and Demand (the drivers of profitability)

I realize founders are often big picture thinkers, which is good. I’m a founder. I get it. But founding a business is more than just having a big idea. You need the idea to  be practical, and you need the foundational aspects of a business if you’re ACTUALLY going to found a company: you need to know who your customers are, why they want to buy AND USE what you’re offering, and how you’re going to structure the work so that you can increase the interest from your customers. Your customers are part of your market—THE part we like to call “the demand”—and without demand for your product, you will LOSE MONEY right away paying for what it takes to PRODUCE and DISTRIBUTE your product, which is your SUPPLY.

Founding a business means you are setting up an efficient structure and necessary PROCESSES to create and increase that demand SO THAT you can make and provide SUPPLY to your customers… you SELL that SUPPLY to your customers, and as long as the price they pay, or the money or revenue you receive from the sale, is bigger than the cost of supplying, or the “Cost of Goods Sold,” you will be in position to make a profit.

A PLAN covers how that’s going to get done AND how you’ll make sure your business is running well, while paying and offering benefits to employees, DEVELOPING your employees so they, too, can continue to improve and hence your business can improve, too. Paying your taxes, remaining compliant with the rules of the road.

And when you make a profit and can continue to expand your business, or SCALE your business, you’re getting into position to be a successful founder.

And… hopefully… enjoying yourself, too.

Being a successful founder takes far more than big energy, fast talking, and enthusiasm. It takes work. Lots of it. And that work is focused entirely on what you are doing—what you are building—why, your customers, your market… and of course, how you’re going to get it done, and THAT’S the area of a business I see founders overlook the most.

Full stop.

Founding Isn’t All About Profits: It’s About Leadership

What I really like about this question is how unique it is. Most studies, articles, and questions center around the personality profiles of founders or the strengths and weaknesses of founders or how the most successful founders think, act, manage, and lead… and it usually looks like ONE type of leader, or ONE type of person. There’s rarely enough emphasis on the necessary business knowledge needed—just at baseline—to be successful. Yes, behavior matters A LOT, but so too does the right amount of perspective so you know where to push, when to pull, and where your priorities are.

Aside from missing the point of what founders need to be successful, the biggest problem I see in focusing so much on personality questions about founders is they generally study just one type of founder. You know—the type EVERYONE thinks of when they think of a founder. 

Look up Jim Henson if you want a great example of a start-up founder whose legacy, founder style, and leadership style are all traits we should talk more about. 

I’ve known people who have told me to my face that traits like kindness, patience, and deep respect for others aren’t necessary, or even that they are weaknesses, and not the profile of the best founders. And that’s not true, at least, there’s no evidence to support that. It may not be the profile of the most KNOWN founders… but, look at the evidence. The best founders with the most lasting legacies people look up to, probably AREN’T the founder types that pop up in most people’s heads.

And like with ALL human metrics or personality assessments, or strengths preferences, there’s never just one trait or one strength or one way of behaving that makes a founder more successful than others anyway. And in truth, a lot of it depends on LUCK and TIMING anyway. You know what else it depends on? Leadership skills, an executable plan, and how well the founder can connect with good humans, because successful founders bring people along to believe in something that hasn’t been done yet, likely isn’t completely understood yet—might not even be seen yet. That’s the point of being a FOUNDER. You’re literally “founding” something.

And once you excite and inspire others to WANT to hear about your idea, then you have to keep the engaged while you describe it AND it has to be realistic enough for others to be able to see what you envision—that it’s worth it. 

As such, there shouldn’t be any mystery about what makes a founder successful: you’ll see it’s generally the same traits as what makes a leader successful, and it’s not just in how well you sell your vision. It’s also how patient you can be, whether you are able to sit still and take in a lot of information, whether you can read a room—watch others, pay attention, listen to what they’re saying and what they’re NOT saying, build and cultivate the right relationships and in a very savvy and diplomatic way, dissolve and walk away from the wrong relationships… or know how to at least put a pause on it.

… And Knowing How to Get Work Done…

And so, while there are all kinds of articles and studies that look at certain founder traits, to me—studying or considering founder traits or the entrepreneurial personality isn’t as relevant or even as interesting as studying what it takes to LEAD a successful startup as a founder. And that’s what I love about this question: it focuses on what aspect of A BUSINESS a founder overlooks. And in my experience, it’s knowing what works needs to be done, a willingness to roll up some sleeves to GET the work done, and measuring whether you are on track as expected. 

It's resisting this urge to compulsively jump into making a product, or manufacturing SUPPLY, before you know who’s going to buy it and how they’re going to buy it, or supporting DEMAND.

A few years ago I created a rule that I would only work with early stage startups that had a plan for how they would scale, or expand, their business. Vision is great, but not if you can’t see what the roadmap looks like.

Additional Resources

For your resources, I have the same study I put in the show notes for Episode 29, which answered the listener question, “Why do so many startups fail?” It’s from Kerr et al.’s 2017 paper, “Personality Traits of Entrepreneurs: A Review of Recent Literature.”

I also included an article from Meghan Corasaniti at RingCentral. RingCentral is an AI-powered customer communications tool, and they focus a lot on small businesses. I have no affiliation with RingCentral, nor have I used their products, and as such I remain neutral and need to disclose that this is not an endorsement of their product, but they offer great perspective for entrepreneurs and small businesses owners and leaders in their blog section. This article is called “10 reasons why startups fail (and how to avoid them).” The article is short but thorough. Number five on Meghan’s list is a “Flawed Business Plan,” but of course I would put that as reason #1 because… if you have a plan, a real plan, it means you have done your diligence for all the other items in the list. When you see it, maybe you’ll agree. Drop me a comment, let me know.

AND SO! I have ALSO INCLUDED, the page from… and this will NOT surprise you if you know me or have listened to other episodes: the US Small Business Administration’s page on writing your business plan. USE IT! It walks you through what you need to be thinking about and even offers a couple of templates.

Remember, SBA has A LOT of resources available, including different early stage funding opportunities, and so when you see their page about writing a business plan, it aligns to a lot of the support they provide to small businesses overall.

Know your resources, and USE your resources.

Final Thoughts

Here are my final thoughts: starting up a business as a founder is a commitment, and if you want to make that commitment worth it, you need clarity. You need to also effectively communicate not just what you’re doing and why, but to some extent, HOW you intend to do it. There are some who will jump on board with you because they have an entrepreneurial side also: they like to build things, they really want to feel less leashed up and tethered to bigger company constraints, and they’re ready to go all in.

But as the saying goes, the proof is in the pudding or your fate is in the details. 

If you aren’t ready to clearly articulate whether your idea is feasible, see Episode 27 about prototype funding, and how you might go about it, even if notionally, you’re not ready to talk about your new business venture, and you’re not YET ready to be a founder. As I’ve mentioned in all the Business Basics episodes: your early job as a founder is to build a plan that creates and increases VALUE for your business and for your product. If you can’t demonstrate that with a solid draft plan that highlights your readiness to get started up and running, you’re in for a bumpy road that could otherwise be avoided… or at least… not quite so bumpy.

Wrap Up & Submitting Your Questions

And there you go, Episode 31 and the last in our Business Basics Series where I consolidated dozens of listener questions into the most common ones related to learning about business basics, similar to what I did in Season 1 with the Strategy Series. Episode 32 returns us back into more stand-alone questions, but they’re still related to Season 3’s theme about the block and tackle aspects of running a business, so tune it! 

And keep the questions coming! Just go to my show’s website, AskChrista.com, that’s Christa with a C-H, where you’ll see my latest episode on the front page in both video AND audio—and check out the audio version when you can, available on my site but also anywhere you listen to podcasts. I LOVE listening to audio shows, especially on my commute, and I record the audio version separately.

Back to my site! you’ll see the “Submit a Question” tab where you can submit YOUR question, and while you’re there, sign up for the “More Answers” newsletter, where I send out a Sunday night booster for our community to set you up for the workweek.

Thank you for your support. And remember, if you have a business challenge or a workplace issue—Ask Christa!