Start with the end in mind

An old cliche to be sure, but one that has certainly proven to be invaluable within our engagements with clients looking for assistance in defining/refining their corporate strategy. Nine times out of ten our clients are initially looking to document a description of who they are today but are often unwilling to articulate who they want to be tomorrow. As a result, they find it excessively difficult to determine how much capital they will need to inject/raise, how many employees they will require to operate the business, etc.. Without at least a vision for where you want to end up (i.e. how much revenue, what level of market share, etc.), it will be next to impossible to identify your next steps.

Our experience has been that the very first exercise you should run through before making strategic decisions of any kind is that of drafting three year pro forma financial statements that are founded on the best information available to you at any given point in time. On the surface this may sound like a trivial exercise but ultimately your projections will serve to provide the logical backdrop for nearly every strategic decision you will have to make going forward:

• Don't know who to target with your product? Do the math to determine how many sales it will take to achieve your revenue targets and then assess how many target markets will be required to support these sales levels.
• Don't know how many people to hire for the upcoming year? This answer should flow easily from the previous math coupled with your understanding and/or expectations for best practices around employee productivity.
• Don't know when you should sell your company? Your financial projections will give you an accurate assessment of the value of your company over the next three years and from there it is all a matter of your personal objectives.

Just like being in a car, you can drive around endlessly forever but if you at least have a map that points you in the right direction, chances are that you will end up significantly closer to your preferred destination.