Yesterday, Ken gave me his solution for not getting half pregnant (See my blog of October 19). He hires the complete technology team up front, then levels off the hiring for another year. That gives the people time to get to know each other, learn to work in a unified manner and focus on one thing: finishing a great product before the deadline.
That sure beats arriving at the deadline half finished with cash near zero.
To do that requires a shift on the classical bplan: You must hire more people earlier in the first year. That leads to spending more cash in year one. That can hinder getting your seed round. "Aha!" you say, "now I know the trouble with that idea.' Well, before you throw it out, pause and look at the benefits:
- Year two spending will be less than you first planned. That makes it easier to get the second round of financing.
- Your product will be launched on time. That gives the business development team (marketing and sales) a more efficient way to prepare to execute their plans. They have more confidence they will be selling what you tell them you plan on delivering. They can position against competitors with more precision.
- The company gains self confidence. People believe they can deliver what they plan on. This increases innovation and creativity (risk taking).
It sure beats having an all hands company meeting to announce layoffs.
BOTTOM LINE: Consider re-thinking your bplan for the first two years. Examine how you might benefit by using Ken's idea. It works for him. He is a very respected, serial entrepreneur. I have added his suggestion to my tool kit. It might work for you.