Strategic Planning and Managing Entrepreneurial Uncertainty

The past appears less uncertain in retrospect, making current uncertain times feel uniquely difficult.

We tend to forget the dips, wars, and challenges of the past, remembering only the positive outcomes, which creates a false sense of security about past decisions and exaggerates the stress of present uncertainty.

Why: Everything seems better in retrospect because there is no uncertainty; we know how the story ends.

"It's interesting how stressful entrepreneurship can be because of uncertainty."

The primary difficulty in entrepreneurship isn't learning tactics, but managing unexpected, high-stakes operational crises.

While knowledge deficiencies (tactics) can be learned, the real stress comes from situations like losing key staff, payment processor shutdowns, or inability to make payroll, which threaten the business's existence.

Why: A lot of the stuff of what makes entrepreneurship difficult isn't really the tactics; the actual tactics of business are relatively straightforward, but the unexpected crises are what make it stressful.

"a lot of the stuff of what makes entrepreneurship difficult isn't really the tactics."

Maintain a hopeful outlook for the future while realistically acknowledging the past wasn't as smooth as remembered.

This perspective helps entrepreneurs navigate current challenges by understanding that future improvements are likely, and past successes were achieved amidst significant difficulties.

Why: This mindset provides a hopeful message for entrepreneurs by balancing optimism for the future with a realistic view of past struggles.

"the future is likely going to be better, the past is not as good as we remember it to be."

Strategy is fundamentally the prioritization of limited resources against unlimited options.

Effective strategy involves making deliberate choices about where to allocate scarce resources (time, money, people) to achieve the best possible returns, rather than trying to pursue every possible opportunity.

Why: Businesses that move fastest are those that are the best allocators of resources to the things that get the best returns.

"I define strategy as prioritization of resources, and if I wanted a longer definition to be prioritization of limited resources against unlimited options."

All strategic initiatives should ladder up to one of three core objectives: increasing customers, increasing lifetime gross profit per customer, or decreasing risk.

These three objectives directly contribute to a company's value and provide a clear framework for evaluating the purpose and impact of any proposed action.

Why: These are the fundamental things that make a company more money and make a company valuable.

"every single what that you got from today and yesterday should ladder up to one of three objectives. So number one is it should increase the number of customers that we get. So number of new customers, number of sales. It should increase the lifetime gross profit per customer. Or it should decrease risk."

Teach your team the core business objectives to empower them to better understand and align with strategic decision-making.

By providing a clear framework (the three objectives), team members can evaluate their own ideas and proposals, leading to more informed discussions and a shared understanding of priorities.

Why: It will give them a framework so that they can better understand your decision making process.

"I would teach this to your team, because it will give them a framework so that they can better understand your decision making process."

Evaluate any proposed initiative not just on its potential benefit, but also on its opportunity cost compared to other uses of the same resources.

Before committing to an idea, ask if there's another way to spend the same time and money that would yield a greater return. This ensures resources are always allocated to the best possible idea, not just a good one.

Why: If there's a better use of the same resources for a greater return, then a good idea is not the best idea and should not be pursued.

"Is there anything else that we could do for eight weeks and spending $25,000 that could increase the amount of money that we make in this business by more than five percent? If the answer is yes, although that is a good idea, it's not the best idea. And so that's why we're not doing it."

For smaller businesses (under $3 million/year), increasing volume ('more') is almost always the most effective growth strategy.

Rather than optimizing existing processes, simply doing more of what works (e.g., hiring more salespeople) yields more predictable and significant growth.

Why: For smaller businesses, 'more' is almost every time the solution to growth.

"If you have a smaller business, call it, let's say, less than $3 million a year. Almost every time, the solution is more."