How Important is Planning for Startup Entrepreneurs?

If a single phrase sums up the typical startup attitude, it has to be ‘move fast and break things’ – Facebook’s famous internal motto. Instead of worrying about the consequences, startups prioritize actions, patching up the cracks later.

Facebook is far from the only company to have run according to this principle. From a software perspective, companies like Spotify, Shopify, and Klarna have aimed to entirely disrupt large-scale markets by moving faster than the competition without worrying about real-world complications.

Physically, the attitude is just as standard but tends to have more serious potential consequences. Notably, companies like Uber and Lime have launched without considering possible legal objections to their services in several jurisdictions, with subsequent suits necessitating severe changes to their approaches. 

Ultimately, even beyond the legal side of things, there’s an excellent reason why Facebook left its original motto behind. In 2014, the company announced a shift in direction, publicly changing its attitude to ‘Move fast with stable infrastructure.’ 

The company’s branding transition to Meta is probably the most visible example of the change. Since acquiring Oculus (again in 2014), Facebook has been steadily developing its VR infrastructure to support its ‘metaverse’ rollout. In the background, however, Facebook has constantly been working on its infrastructure, developing its ad platform into a primary profit driver.

While the company’s stock has dipped significantly over the last few weeks, looking at Facebook’s value over time demonstrates how more effective the carefully-planned strategy has been than that initial rush to ‘break things.’

In 2014, the company’s stock traded at $55-65 a share. Today, that’s almost quadrupled – at the time of writing, Facebook is trading at $217.70 per share, with an estimated value in the hundreds of billions. The company’s revenue has skyrocketed even further – with around $118 billion in 2021, they’ve scaled to approximately ten times their 2014 performance, with net income following suit.

Without that planned-out strategy, this just wouldn’t be possible. Without a plan, you’ll eventually find yourself on the back foot, forced to be reactive rather than breaking paradigms – ultimately unable to ‘move fast in the first place. 

Look at what happened to Facebook’s competition – MySpace, Tumblr, and the like. They didn’t plan for the future, were acquired by companies who expected permanent, constant growth without a real roadmap towards profitability, and ultimately collapsed.

According to Shockwave Solutions co-founder Emma Rainville, it’s one of the most common problems for initially successful entrepreneurs. Having worked with [hundreds] of startups to remove operational issues, transform revenue into profit, and change inconsistent approaches into regular, scalable processes, Emma sees a lack of planning as one of the single most significant issues for startups:

“When we start working with any business, one of the first things I ask for is their list of key goals for the following year. I’ve heard many clients tell me it’s the first time they’ve ever put those on paper, thought them through as more than an idea. That’s a real problem. 

When the business owner doesn’t know what they want to achieve, their team will not have any idea what they’re working towards. They don’t have any reason to take the initiative, to perform at their best.”

However, the problem is far from unfixable. While vast multinationals like Facebook naturally take some time to shift directions and implement an overall plan, most startups can be more responsive and quickly start to reap the benefits.

So, what’s the secret to designing and implementing a plan, and what additional benefits does it offer startups?

For Emma, it all starts with thinking through the future. Most business owners have at least a rough idea of where they want to be ten years from now – roughly how much revenue they want, how much of their market they want to reach, and what additional areas they want to start running.

Talking through these goals and getting them down on paper means that they’re no longer hopes – they become targets for the business. 

From there, it’s time to start breaking down those targets. What needs to be accomplished to hit each target – and when does it need to be done? If the plan is to quadruple revenue, the business will likely require new staff, new channels, new locations for physical retailers, and the like. 

Setting achievable milestones is vital for business success. That quadruple increase in revenue may seem daunting, but it immediately becomes more realistic once it’s broken down into steps.

Typically, these milestones come in two forms – annual targets and quarterly goals (also known as rocks) building up to those yearly targets. 

By assigning these rocks to all key team members, entrepreneurs can directly connect their employees to the company’s overall success. Knowing what part you play in your company’s goals is an incredible motivator – it gets you more invested in your work.

Realistic planning with high but achievable goals is vital for startup success. It gives your team a simple, practical framework for success. It allows you to continue driving innovation past that initial rush while making your staff into motivated, engaged team players – not just a set of employees. For more information on how entrepreneurs and businesses can scale visit www.shockwavesolutionsllc.com.