Start-up Memoires: Business Risk & Beyond Planning

Start-up Memoires: Business Risk & Beyond Planning

I started a business. It made me want to drink copious quantities, smoke myself into oblivion and hit my head against a brick wall. Instead I wrote a blog.

Site Launch Day: 24

User Count: 37

Going right:There was more traffic on a Saturday when I took the day off.

Going wrong: There was more traffic on a Saturday when I took the day off.

Comment: Lesson. Take the day off.

Have you ever noticed how activity tails off towards the end of the week? People grumble about Mondays sure, but productivity is at its highest. Lethargy kicks in by Wednesday and by Friday people are only thinking how they can scarper off early down the pub to celebrate two days break. At least that's what the traffic stats are telling me for Investment Impact. Its perhaps ridiculous to conclude anything after only two weeks data, but as an analyst I like to hypothesize in order to test the theory out as soon as I am able and put into place countermeasures. Last week's countermeasure for Friday Fatigue was Huffington publicity, now I will time publishing appropriately. Opportunities and Risks mold my thinking at most times.

Thus after having been woken every night for the past 16 months, (and my boyfriend's horror at having been woken from his slumber on two consecutive nights) my analysis of my second pregnancy lethargy tells me that it is necessary for my daughter to sleep through the night now because I need some good quality sleep before the next bout of night wakefulness occurs.

"Am taking action. She has to learn to sleep through the night, she's old enough." said my boyfriend seizing the power and having forgotten that he is repeating exactly what I said to him two days previously.

Hence last night when she awoke at 4.45, we lay rigidly in bed, wide awake listening to her screaming until 6.30. At which point we decided it was officially morning. Not sure that strategy worked.

In the business world one stress-tests predicted scenarios in order to mitigate possible risks and identify opportunities. A famous phone company - oh let's call them Datafone - once launched a tailored radio service where recommended music was streamed to the user over their phone according to previously defined preferences. Rather like Amazon's "customer's who bought this, also bought..." algorithm. Have you heard of it? Probably not.

The problem was that the service had already cost a lot of money, manpower and machismo. Even at one female financial analyst's - oh let's call her Louisa Leontiades - clear advice that the project was highly risky and should be scrapped, there were a lot of egos (coincidentally male) which had already been sacrificed to get this project off the ground.

Why did it fail? Many reasons but predictably because both business risk and financial risk were too high (ideally, both should be low, but it's ok in general if one offsets the other).

Financial Risk: V. High. The service offered unlimited streaming 24/7; this possibility - however unlikely - meant ongoing costs vs. a fixed price subscription. Nowadays, price erosion means that data transmission costs are far lower (hence why Sky has evaluated a better Business Case to offer unlimited downloads I suspect). There was a long payback period for development costs already expended offset only partially by a very low margin on the service.

Business Risk: V. High. Fighting for eartime is difficult; a myriad of devices already existed - real radio, CDs, stereos, ipods (just out at the time) and only a portion of anyone's day to listen to music - an essentially solitary activity. Equally, pushing music to the consumer denies them the possibility of free choice.

Big lesson here for me and my business.The business risk is high. An online consultancy? Old school thinking demands face to face time for their consultants. Even tho times, they are a-changing, they have not yet toppled over to my way of thinking. Corporates are still in the education

My financial risk fortunately is very low. I have no investors to satisfy with equity returns. All development is financed privately. And theoretically my risk mitigation strategy is that, at any time, I can return to being a regular consultant.

After my second child is born, that is. And therein lies the rub. It's an emotional risk - something business schools don't tell you about and economics doesn't factor in. My unwillingness to return to "corporate" work even for a large amount of money because in order to do so I will have to sacrifice time with my children.

Site Launch Day: 25

User Count: 37

Going right: Landed a really big corporate client. Huge.

Going wrong: Am not allowed to use it in any publicity generating way, because they don't want anyone to know they're shit at financial modeling.

Comment: Conflict between my word and my business promotion. Surprisingly my word won. Give self 1 ethics point.

"I haven't got my sister a birthday present." said my boyfriend the day before her party. "Could you go to the store and get her like a jar of olives or something?"

We are on an island with one convenience store which happens not to be Harvey Nicks or Harrods.

"But I reminded you about her birthday before we even left the UK." I said. As though if I reminded him of what I had reminded him before, this would solve the issue at hand."Is your solution to give her some groceries then?"

"Well, it's not like I'm saying Happy Birthday Sonja, here's a carton of milk." He replied. "You know, olives and maybe some jam."

"Like we should make her a hamper?" I suggested.

"Yes." He said, appearing relieved that I finally got what he was on about. "But without the hamper part. I don't think they sell them."

After some discussion, I persuaded him that perhaps a birthday cake would be more appropriate and demonstrate some effort on our part, all the while aware that it would be me who would be making it. Two hours later and covered in flour, I said -

"I hope she appreciates how annoying I find this." I hate anything that makes me feel useless, and baking is not one of my fortes.

"If she doesn't you can say 'Happy Birthday Sonja, here's a cake. I hated making it.' " laughed my boyfriend watching my antics.

It turned out well despite my daughter hiding the kitchen timer somewhere in her Lego and my dropping of the entire tin on the concrete in the parking lot. But at least if it hadn't the consequences were relatively easy to bear. A miffed sister in law and belated - probably-more-expensive-than-if-it-had-been-on-time - birthday gift.

But throughout my professional life I have been taught that planning is of the utmost importance. 'Fail to plan and you plan to fail' has been quoted at me more times than I care to mention - and for a good portion of my life I worked exclusively in the Financial Analysis and Planning function.

What people who plan DO fail to do however, is remember that the plan is simply that - a plan. And like all plans if it doesn't suit the circumstances, it should be flexible enough to be adapted or even dropped. The business plan for Investment Impact has been created and sits in the archives of my computer, waiting to be dusted off and adapted when the time is right. Does that mean Investment Impact is directionless?

Of course not. But "The Plan" was an exciting exercise, mainly focused on eliminating some risk and defining some goals. Turned out to be less important than defining the principles of what we are trying to achieve and what we stand for.

  1. A more democratic and cost effective consultancy solution for all sizes of company
  2. A greener more carbon friendly business where unnecessary travel costs and emissions are avoided
  3. A sharing knowledge and excellence ethics available even in remote geographical areas
  4. A more exciting way to work utilizing all kinds of social media and gaming otherwise forbidden in the corporate world
  5. Freedom from the confines of geographic and traditional working time restraints for both clients and consultants

The wonderful tool that is the internet shifts the power to the end consumer, expands the market and reduces barriers to entry thus improving our ability to provide excellent consultancy in competition with the all-powerful big four consultancies. Game on.

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