26 / 07 / 2022

Gimme Shelter (Or Better Yet, a Business Plan)

In a Twilight Zone episode titled “The Shelter,” a neighborly dinner party is suddenly disrupted by a warning from the Civil Defense: Unidentified objects have been seen flying toward the United States. Fearing the worst, the only family who had stocked a bomb shelter quickly takes refuge and locks the door, while their friends desperately try to break their way in.

Carey Smith | Founding Contrarian

That Twilight Zone episode was a reflection of its time — 1961 — when children practiced huddling beneath school desks, and weekend warriors built fallout shelters at the recommendation of then President Kennedy. The episode’s message, after the alarm is called off: In order to save civilization, we must stay civilized.

It seems almost quaint in hindsight: Everyone was in such a tizzy over things that never materialized. I lived through those days, and all the various crises since then, which is why I have usually taken the attitude “so what else is new” when the media and other Chicken Littles would have us believe the end of the world is near.

Right now, though, things seem a bit more f*cked up than usual, even to me. Just like in 1961, a Russian leader is threatening the West, and we don’t have the benefit of hindsight to know how it will turn out. At least we know better now than to build bomb shelters, because that idea was doomed from the start.

In every direction, there’s stupidity, instability and turmoil — from food shortages to rampant inflation to energy supplies. Government mandates and administrative bungling are prompting protests from the Netherlands to the one-time Dutch colony of Sri Lanka, where rioters swarmed the president’s palace and splashed — and probably worse — in his pool. In London, Prime Minister Boris Johnson was forced to resign but remains in office as a very lame duck. One of his former ministers remarked that the resulting instability “will fuel a febrile moment of midsummer madness.” Meanwhile, in America there’s constant dithering over the question: “Are we, or are we not, in a recession?”

And just in case you need any more proof that the times they are a-turbulent: Silicon Valley big spenders are actually tightening their reins. One firm pronounced the good times “unambiguously over,” while Sequoia Capital issued a 52-page memo titled “Adapting to Endure.” “Growth at all costs is no longer being rewarded,” proclaimed Sequoia. If you’re an entrepreneur, it’s natural to be concerned. But fear not: The end’s not near, and your company or your brilliant idea is not necessarily doomed — unless it was batshit crazy to begin with.

Now is the time, however, to do what you’ve heard a thousand times: Sit yourself down and really focus on fundamentals, because Napa Valley wine isn’t flowing like water anymore. For that matter, even water’s not flowing like it used to. Develop a detailed business plan, because nothing is more important.  And it shouldn’t be dependent on mega millions of dollars provided by less-than-business-savvy investors, either. It doesn’t need to be sexy and it doesn’t need to include eye-popping numbers. In fact, it’s better if it doesn’t.

A good business plan is one that’s built from the bottom up. What does that mean? Let’s assume you have a great product, have done the market research and have determined who and where the prime demographic resides. The big question is how much does it cost to take your product to this demographic? Assume it will require between a year and 18 months to reach the point where you are going to break even. How much money do you need or have to cover this ramp-up? Your starting product price point should support your proposed sales marketing structure and its development after this initial ramping. If you don’t have access to this amount of money, you should focus on securing it, either from investors or trimming your planned budget.

If you’re not sure exactly how to go about writing out a detailed plan, there are people who can help. But they’re almost certainly not the same ones who a year ago would have happily tossed millions at you. And the best thing is, once you write that plan, if you eliminate non-essentials and give yourself a little more time, not only will you realize that you don’t need all those millions, but you’ll own a bigger percentage of your company, too.

It’s really just the same message Rod Serling hoped to convey back in 1961: Don’t lose your cool when everything seems like it’s going off the rails. Stay civilized — and make a plan.