Early-stage companies have to make assumptions and guesses all of the time. It’s inherent in trying new things, in building organizations that are breaking new ground, and in developing new approaches that haven’t been tried before.
But you should force your team to take the time to model out those assumptions, rather than simply shooting from the hip and hoping for the best.
I was reminded about this tendency to ‘just want an answer’ yesterday on a call with a nonprofit I’ve been advising. They have to develop a multi-state education campaign on a fairly complex topic, and it has to be executed in a fairly short window of time.
Throughout the one hour call, they kept asking me for an estimate of how much they would need to spend in each market to achieve their goals.
And if I had just thrown out a number, they would have been happy, I would have sounded smart, and the number would have been wrong.
It took the entire call to convince them that doing a little math would go a long way.
- How many people do you need to reach in each state?
- What are the various channels you have at your disposal to drive people onto your email list?
- How can you blend paid channels with organic channels to lower your total cost per acquisition (CPA) for each email you add to your list?
They wanted to start with the number to drop into their budget. I had to back them up to first define the goals, strategy, and tactics to get to that number.
And the reality is, I see this all of the time. It’s far too common in early-stage pitch decks. But I’ve seen this happen in $50 million companies in the middle of a planning session. The CEO asks for an estimate of spend against a particular tactic, and someone around the table is more than happy to spit out a number with far too little information.
And then everyone is left to scramble to figure out how to develop a successful plan within the constraints of that made-up number.
Make your team slow down.
Define the goals of the program you’re developing.
Think about the various channels at your disposal to achieve those goals.
And then do the math behind each of those channels.
It doesn’t have to be a multi-tab, complex spreadsheet exercise. It doesn’t have to be months of work. You don’t have to be certain of every number in your model when you’re trying to build initial estimates.
This isn’t a rant against the SWAG (Scientific Wild-Ass Guess). I’m a fan of the SWAG.
Startups need to move fast, make the best decisions they can with the information that they have, and move forward to test ideas to find paths to success.
But you should recognize that there is a big difference between simply shooting from the hip versus taking a little bit of time to lay out your goals and tactics to quickly model out a range of assumptions and possible outcomes.
Taking the time to work through a simple model will give you a framework for comparing actual results to your assumptions and estimates by the various channels and tactics you are working through.
And that’s going to make your decision making much faster and more effective as you execute.