July 26th, 2023 | By: Wil Schroter | Tags: Strategy
It doesn't matter if we have a "big opportunity" if it never really accomplishes our personal goals.
Yet it's hard to avoid starting a company without thinking in terms of the market potential or the ultimate outcome. If we run around saying that our new startup could one day be a "$1 million business," we're going to get very few high fives. Yet, if we say we're going to be a "$1 billion business," we'll have people lining up to talk to us. Why is that?
The difference in that balance becomes who benefits from that outcome. At $1 million, it's almost entirely the Founders. At $1 billion, it's investors, staff, and everyone else that's joined in the party. What we need to consider is who we're really building this business for and, as such, how big it really even needs to be.
When we're sitting around thinking about how big this startup can be, have we stopped to ask who is really asking this question — and why? If what we're building is successful at all, which statistically it won't be, why are we so concerned about how big it will be?
Most of this "how big can it be?" narrative is driven by investors but for good reason. Investors need big outcomes to get big returns. They need big returns because most of their investments will fail. But that's not our problem. Our problem is whether this specific "investment" makes us money or not. Whether it's a "big business" later on, honestly, doesn't mean shit if it solves our personal goals.
What's interesting is how "small" of a business it takes to become a big enough business for us personally. A $1.5 million per year business making $500k in net income could change almost anyone's life. Is that considered a "big business"? Absolutely not. Does it matter to us as Founders? Also, absolutely not!
We often get so wound up in whether or not we're building a big business that we lose sight of what our near-term and long-term goals really are. For example, if I'm making $50K per year right now, and this opportunity could help me generate $100k per year, how is that not a wonderful goal?
It's possible to fast forward too much here and, in the process, talk ourselves out of a lucrative opportunity. We should be thinking about two sets of goals — the goals that would make an impact in the near term (like doubling our income) and the goals that make an impact in the long term, such as maximizing our income potential.
Where we fall short is creating goals that we don't actually need to achieve. We start telling ourselves, "Well, this would never make more than a million per year in net income." Wait what? That would put us in the top 1% of income earners in the entire country (and most of the world, BTW). How is that a problem?
There's a bit of a misconception that the only way to build a big business is to start with a big business idea. That's total bullshit. The way to build a big business is to start with a viable business and then build from that. So what might feel like a small business now is more likely the platform to build something much greater later.
The startup world has started to lose sight of how businesses are actually built. We've tried so hard to game startup physics by raising massive amounts of capital to accelerate giant outcomes in huge markets. And it works every time — 1% of the time. While that sounds fun (unless you're the poor bastard doing it), it's actually maddening because unless it's a big outcome, we wind up with nothing.
Instead, we should be focused on building a very small business in the near term, but one that sets us up to build a bigger business (if we need to) later on. The best way to score runs is to get on base first.
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Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.