Prematurely scaling sales and marketing before adequately testing your business plan hypotheses in Customer Discovery is just one common mistake startups make. Another is when entrepreneurs and investors compound this problem by assuming that all startups grow and scale by executing the Revenue Plan.
The Appendix of your business plan, with the financial spreadsheets you attached as your Income Statement, Balance Sheets and Cash Flow Statements, has one of the leading cause of death of startups.
Reality Meets the Plan
I got to see this first-hand as an observer at a board meeting I wish I could have skipped.
We were at the board meeting of company building a radically new type of communication hardware. The company was going through some tough times. It had taken the company almost twice as long as planned to get their product out the door. But that wasn’t what the heat being generated at this board meeting was about. All discussion focused on “missing the revenue plan.”