How To Forecast Long Term Business Growth

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Starting a business? It’s natural to look at the long term. You’ll want to justify the opportunity cost of saying “no” to alternatives. Perhaps, like leaving a traditional job.

Involved in fundraising or recruitment? You’ll also want to forecast the long term. You want to know if the venture is worth your time and money.

Here’s the problem with the traditional business plan. They cost too much to make, have too much detail that won’t materialize, and won’t be read. Ash Maurya expounds very well on why the Lean Canvas has to kill the business plan. The recommended way of planning a business is to favor exploration, conversation, and iteration. That’s unlike typical long term plans that assume too many details, that will cause frustration over time.

Consider that potential rises with how much you experiment, which increases uncertainty. The very thing that made the business attractive is what introduced risks. You just can’t plan in detail, especially if you’re building a business with the chance of growing.

How do you predict the future then? It’s about your proof of driving towards your North Star every month.

Let’s use Steve Blank’s Startup lifecycle to discuss a business’ ability to grow.  It consist of the stages: Search, Build, and Grow. Each step has its own criteria of completion. For Search, it’s the ability to come up with a repeatable and scalable business model. If a business has proven its ability to complete this step, investigate its ability to complete the next step. See if their systems will allow the to later Build and Grow a company.

Traction, not a plan for traction, is what both investors and entrepreneurs should ultimately demand. – Ash Maurya

If you’re able to build an operation that constantly learns and hits aggressive targets, you have a promising business. Predicting next quarter’s results is tricky enough. Focus on building a trustworthy machine. Prove that your team can fulfill aggressive commitments. Do it over and over. The only certainty you have is your latest performance. From there, consider that there will be good and difficult months. With that in mind, are you still optimistic?

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