Page 131 - 6 Secrets to Startup Success

110 6 SECRETS TO STARTUP SUCCESS

The fact that her plan included the development of a high-value
real estate asset in a preferred area of the city gave investors confidence,
and it also drove her financial forecasting. She started with the total up-
front cost of the building, added to it the overall cost structure required
to operate a world-class service from it, and worked backward to create
sales projections that would guarantee an acceptable path to profitabil-
ity. Lynn’s attitude at the time was, “Whatever it takes, we can do it.”

But in reality, just like Mark Williams, Lynn was in the earliest
stages of product development and gestation, facing many unknowns.
In one sense, the most predictable aspect of her vision, the building,
didn’t matter. Her real product would not be the physical facility, but
rather the services that would flow out of it, and, on this front, she had
no factual evidence that her service concept was viable. She was trying
something that had never been done before, and no amount of plan-
ning or projecting could accurately predict in advance how the service
would play out in the real world. Looking back now, Lynn wishes she
had invested more of her upfront money in more thoroughly investi-
gating the market for an upscale adult daycare service, finding ways
to test her concept before committing to millions of dollars of fixed
costs. Depending on how her early experimentation went, she might
have delayed construction in order to more fully prove her concept.
She might also have been able to utilize her personal savings (she in-
vested more than $400,000 into the company) in a low-cost pilot ap-
proach that may have gained enough traction to remove the need for
outside investors. Or, at a minimum, this path would have helped her
establish more realistic sales projections, based on actual market re-
sponsiveness instead of on a grand vision, and allowed her to plot a
more steady, realistic path to profitability.

Constructing a Compelling Math Story

Your math story is the driving narrative of your business, defining what
you are attempting to build and how, with numbers attached. A good
math story cuts through the window dressing attached to most busi-
ness plans and homes in on issues and variables that should be kept
front-of-mind. It connects your story line with your bottom line, set-

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