Advice for a new business? Lower your sights.

It's easy to be overconfident with the financial goals of a new business, but it's better to stay realistic.

|
R. Tscherwitschke/CHROMORANGE/picture-alliance/Newscom
A calculator and pen rest on a chart. Guest blogger Jeff Cornwall writes that it is important not to set goals too high when starting a business.

If business plans are marvelous works of fiction -- and they most often are -- then the specific financial goals that they are tied to are fairy tales.

Don't take this wrong. I am a strong advocate of building a business that meets your aspirations. You need to consciously engineer your financial and non-financial priorities into your business model. But when I start reading plans with specific multiples of EBITDA tied to an exit event a few years out I cringe.

Even VCs know that only 10% of plans they fund (which can be as few at 1% of plans they receive) will probably meet the goals stated in the business plans for their portfolio companies. And yet, almost every entrepreneur seems to think their plan will hit its numbers and reach their specific goal.

I think more of us should take the approach of goal setting that Ami Kassar has set for his business MultiFunding. From his blog:

I often get asked the question "Ami, what is your goal for MultiFunding ?" People want to know "how big" I want the company to be, who do I think will "buy it" one day, is this a "lifestyle business", or do I "want to take it public one day." My answer is that our goal for the first year was to survive, which we did. My goal for the second year is to be able to keep the company growing at a pace where we can maintain excellent customer service, and to be able to make a good living while I do it.

Business models evolve as we learn from the market where our business really needs to be and what it can really achieve. You'll be a lot happier as an entrepreneur if you set realistic goals, especially for the early stages of the business.

Once you get traction, then you can start to set more specific goals that reflect a growing knowledge about the market and your customers. And you can more realistically temper these potential goals with your non-financial goals including those shaped by the time you want for your family, friends and community.

Add/view comments on this post.

------------------------------

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

You've read  of  free articles. Subscribe to continue.
QR Code to Advice for a new business? Lower your sights.
Read this article in
https://www.csmonitor.com/Business/The-Entrepreneurial-Mind/2011/0322/Advice-for-a-new-business-Lower-your-sights
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe