Business Development Service, Project Management Application & Scope
Updated: May 16, 2019
Developing your business is a project. Each phase of the business has a definitive start and end. The definition of a project is a temporary endeavor undertaken to achieve a specific goal with a defined start and end.
Each business reaches different stages in its life cycle. Businesses have 1) incubation, 2) startup, 3) scale, 4) growth, 5) sustainability and 6) profit. Each phase requires a Chief Executive Officer (CEO) with a different set of skills. Sometimes the term "Interim-CEO" is appropriate. Each phase has its own culture. Each phase has cultural identity.
The Reality of Life Cycles & the CEO's Place
The biggest issue we encounter with our clients is coming to grips that founder(s) may need to step down. During incubation the CEO usually needs cutting edge analytical skills, formal education and resume credentials. The incubation stage is full of design, planning, and technical research. The most competent person is the one that can save on technical expertise requirements. This individual can be a board certified engineer, scientist, health practitioner, software programmer, construction general contractor or an attorney.
Startup Phase: During the startup phase the proper CEO is one that can command stage presence, inspire sentiment, and attract capital. Often people misidentify themselves during the startup phase. As a startup you are only an idea. Most often there is nothing tangible to substantiate a claim. The ability to create positive sentiment in an imaginary vision is pure talent. These individuals have congeniality features. Personal connections, close relationships and past unrelated performance is the marker of these people. Third party reliance on this feature usually results in startup failure (i.e. no money or resource attraction). Startup Phases last up to 12 months.
Scale Phase: During the scale process seed money is placed. At this point prudent decision need execution. The Startup CEO can be good at this point but often needs to change roles. The ability to talk, persuade, and inspire confidence only goes so far. Tangible deliverables must occur. Often the Startup CEO is a phenomenal sales person but lacks proper scale experience. Sometimes the Startup CEO can execute the scale stage. The Scale Stage is a series of decisions that legitimizes the opportunity. An example of good scale decisions would be a CEO taking the first $100,000 to conduct the following items: 1) Retain a Certified Public Accountant (CPA), 2) Conduct a Pre-Investment Valuation, 3) File for a registration number to voluntarily report financials in format SEC 10Q 4) Utilize and file a SEC Form D, 5) Secure Director's E&O Insurance, 6) Start a formal registration process (at minimum Pink Sheets) to provide exits for early investors. You will notice at each step the Scale CEO makes measurable plans to 1) legitimize the company, 2) provide accountability and 3) track dollars spent with actual value. The Scale CEO is not the individual to bring profits into the company. The Scale CEO is the individual who implements viable research into a measurable expectation that the Startup CEO sold investors on. Scale Phase usually lasts 12 - 18 months.
Growth Phase: Growth is a process where the company must gain some market presence. Growth is demonstrating the infrastructure put in place actually yields some tangible value. The value can be 1) sales, 2) asset acquisition, and/or 3) market value. Growth CEOs are individuals who understand how to actually create value. The lack of ability to grow a company does not imply incompetence. Often conceptual individuals are visionaries. It can be difficult to admit creation ability but lack product marketing. The skill to acquire market presence is a completely separate dynamic. Understanding the psychology of retail clients and business clients is not the same as attracting investment. Likewise a Growth CEO may be horrible at raising capital. Customers desire to pay for a product. The product must provide value but does not need to earn a monetary return. The fundamental difference between this assumption means the skill is completely different. Growth is usually tied to revenue. Revenue proves your concept can actually work. Growth does not mean you will be profitable. Growth proves concept but profitability requires a separate skill set. Growth Phase usually lasts 6 - 9 months.
Sustainability Phase: Differentiating yourself from a niche and a long lasting brand is its own talent. Nearly 50% of businesses close within 5 years. Making it past 2 years is an accomplishment. Sustaining the growth requires in depth market analysis, fundamental customer knowledge and appreciation for something called "Employees". Employees are individuals who do not put in sweat equity.
As long as your business is still making future promises to people currently working you are somewhere between Idea, Seed and Startup.
Volatility is high. The Sustainable CEO is a person who can take a concept that has initial validation and turn it into a brand the market accepts. Sustainable CEOs understand how to build brands, maintain them, and compete with firm market presence. Usually a Startup CEO and Growth CEO conflict with the Sustainable CEO. One is concerned with big plans for the future and the other is concerned with a realistic approach that will guarantee longevity. Startup CEOs usually promise to make everyone millionaires and Sustainable CEOs are concerned with getting loyal employees. The best option available to a new person is an Employee Stock Option Program (ESOP). Candor, stage presence, and salesmanship is for new innovative concepts. Most people who show up to earn a wage want stability and reliability. Risk Mitigation and removing unrealistic profit expectations is a requirement of sustainability. At best the Startup CEO is someone who changed and at worst the Startup CEO is a liar at this stage. Sustainability Phase lasts no longer than 18 months.
Profitability Phase: The Profitability Phase is the mature cycle of a business. At this stage the brand of business is known. Sustainable CEOs often continue into this role. The Profitability Phase occurs when the plan rolled out by the Sustainable CEO is confirmed. The Net Operating Income (NOI) may be negative but revenue numbers exhibit growth, financing is available from conventional sources, and negative cash flows are within 10%. The Profitable CEO looks to fine tune a working system, plug missing gaps and optimize processes. The Profitable CEO is often a proven performer with industry relationships. The Profitable CEO brings partner relationships (vendors) who cut better deals. In some instances the Profitable CEO is a master institutional fund raiser. These are seasoned performers who understand how to navigate markets, interview with regulators and are seasoned professionals. The Startup CEO is almost never this CEO. This phase can be perpetual but as the company grows it can return to a Growth Stage if its identity is challenged by market sentiment.
The ability to discern which person you are is paramount to successfully implementing sound business models. If you are a startup plan your exit and know your talent acquisition targets. Becoming chairman of the Board or President is never a bad thing.
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Knight Advisory & Planning (KAP) is the only company to primarily focus on Public Private Partnerships (P3) since 2006. KAP operations are spread across countries of the world to serve this need. KAP Network consists of core partners surrounded by interlocking networks of consultants and affiliates in key trading countries and disciplines. We maintain Master Project Manager (MPM) who are American Academy of Project Management (AAPM) certified and are experienced in the following industries: construction, development, finance, technology, FinTech, biotechnology, production, R&D, and manufacturing. With over twenty (20) years of experience let us guide you through the P3 process.