How to balance your short-term goals and needs with your long-term vision and mission? What is the way to have a strategic mindset when you’re building your business?
Solid (recession) business model: Money now and money in the future.— Petri Kajander (@petrikajander) March 24, 2010
Money now and money in the future is a term I coined long time ago. I will explain the details in the video, and you can find the transcript below.
Money now and money in the future. This is the topic today. It’s something I’ve been using over the years. It’s kind of classic. It doesn’t get old. It’s something which guides you all the way when you’re building your company. Those who know I have been using it over and over again. And I’m sorry if you heard it too many times.
But for those people who don’t know what it means, let’s dive in. There’re no redundant words in this sentence: money now and money in the future. All right. Let’s start from the beginning: money now. Money now is the short-term. It means that it’s always a good idea to make some money now, at this moment, in short-term. It doesn’t say how much money you’re making at this point.
It just says that you making some money. What does it mean? Well, if you only starting now, could you get one customer? One client, who is willing to pay for you? It doesn’t need to be much, but they need to be a paying customer. Giving you money. Because it’s a very strong indicator of a lot of things.
First of all, it will tell you that you’re doing something which is so valuable that somebody is willing to give your money. So you know that you are on a right track. It is also an important point for the customer because they are willing to give you money. It’s also indicating just the tiniest bit if you just have one customer or you’re starting, but it’s indicating that you have traction. There’s already a market. At least, a small one to get started with. So there’s a lot of good things about the money now part. Obviously, the biggest one is that you actually are getting some revenues. You’re not diluting yourself.
You are not selling your company. You are actually getting customer money.
And the next bit, the ‘and’ word means, it’s not ‘or’ it’s ‘and’, that you have to also think about the future: money in the future. So it’s a balancing act. You need to think about both at the same time. So if you now making only a little money, you are still finding your traction, and you’re still finding your product-market fit.
You just know and you keep in mind with your decisions and your purpose is to, your objective is to focus on the long-term where you’re scaling it. Where you’re making the most of the money, most of the upside. Those things, which are actually really the purpose why you are building your business. And having this balance in mind is very important because it’s easy to slip on the revenue side if you’re lacking funding and you’re bootstrapping and it’s hard. So it’s just easy to make decisions where you are chasing the money, doing those things which are maybe not building the future. Maybe they actually diverting you away from those very things which are actually building the future company you aspired to do from the very beginning. But because of your lack of funds at the moment, you can get distracted and ‘money now and money in the future’, hopefully, can help you to keep this in mind. So if you making compromises in the short-term, you better think about the future part as well. Let’s jump into the future. What does it mean? It means that this is now the long-term, the biggest strategy, the big game. You cannot just only focus on the short term, but you cannot also focus purely on the long-term.
You need every step of the way build from this moment to the future. Build your reputation and your trust. Gain the trust of the customers. Build a good user experience. Find the pain points. Provide so much value that you can scale the company that you can really build a business for the long-term and the decisions you are making need to be aligned with that goal in mind.
And because the ‘and’ word there, that’s a really annoying word there in the sentence. You cannot either just focus on the long-term and forget the now part. But you need to make money now. If you only focus on the future, it’s easy to divert the focus, and kind of sucking into the dream world where you think that you are building something which is valuable. You think you’re doing the right things.
Maybe you’re doing things that are fun for you or for the team or for everybody involved, but you’re not making money.
This is why the balancing act is so important. It also helps you to focus on the objective of the company from the day-to-day also a bit more to the long-term. If you start to realise that, Hey, we are actually not making money in the short-term. We are not actually getting those indicators from the customers.
They’re not signing up. They’re not paying us enough. our attraction is not working. The product-market fit is not there. Maybe it doesn’t make sense to focus too much on the future if you cannot make it work now. We need to make it work all the way and this is the top game. This is the hard game. But this is the game where you make sure that you are aligned and you can build a successful company that grows. Still, you need to do that lean startup way of trials and errors. You fail and pivot but hopefully with this ‘money now and money in the future’ it will nag you in the back of your mind, in your everyday decisions, and it will help you to balance and guide you along the way when you’re building your company.
Till next time!