go back | Jun 2011

Out-of-band Surprises

Starting a new business is difficult. You need to convince people to work with you and for you. You need to figure out how to differentiate it from the competition, how to make it profitable, and you need to consider what kind of culture it should have. You might need to find investors but you'll definitely need to find people to pay you. And you need to make more money than you spend (that's important). But no matter what the business -- from a dentist's office to a tech company -- there are common challenges.

And common surprises.

When you open a restaurant, you have a pretty good idea of what the business model is: serving food to hungry customers. You have a few early decisions: what kind of food will you make? Where will it be located? Why will this kind of food work in that area? Once that's out of the way, you need to design the menu, work out an inventory, develop relationships with suppliers, hire staff. And you'll probably be doing a lot of renovations.

But after the doors open, things change. Contrary to your estimates, you're selling 2-to-1 take-out over sit-down meals. People love the specials but the regular menu is a dud. One of your suppliers is chronically late with a key ingredient. These challenges can be difficult to overcome -- or even devastating -- but they're surprises that are within a reasonable context. You can expect them. And because you can expect them, you can plan for them.

Out-of-band surprises are different. It's difficult or impossible to imagine where or when they'll appear. You can't expect them. Maybe instead of a restaurant, there's a bigger opportunity in importing and distributing that key ingredient. Or maybe after talking to suppliers and potential customers, you find a better business for your niche in catering. Or delivery services. Or maybe you accidentally invent a new tomato. Or a more efficient way to operate a dishwasher. Who knows?

And that's the difference between a startup and the average new business: in a startup, the focus is on finding and chasing the out-of-band surprises rather than executing and managing a pre-ordained business plan.

So if you want to run a startup, go out and find those surprises. If you look hard enough you might even be able to turn those devastating challenges into opportunities.