Hope is not a strategy for startups and small to medium sized businesses

Strategy for small businesses was top of mind this week with SydStart and the ‘Future of Small-Medium Business’ Summit held in Sydney. Though very different in the purpose, attendance and dialogue I encountered some interesting insights on strategy, startups and small to medium businesses (SMBs) in Australia.

SydStart founded by Pete Cooper (@Pc0) in 2009 is the largest professional tech startup conference, expo and community in Australia. The event gives a voice to people ‘who have done cool stuff’ and people ‘trying to do cool stuff’ from Australia’s tech start up ‘eco-system’. In the first category the speakers included the likes of Atlassian’s Mike Cannon-Brookes, Freelancer’s Matt Barrie, Canva’s Melanie Perkins and Brigade’s (ex-Causes) James Windon – all representatives of successful tech startups or VC-backed ventures. Talks ranged from the reflective (‘5 lessons learned from social media’) to the practical (‘How to attract funding’ or ‘How to assess a business opportunity’) to the aspirational (‘How to make the public sector more engaging’). In the ‘trying to do cool stuff’ category there were pitches from 10 Australian startups with the car analytics and social community GoFar winning the best pitch.

The ‘Future of Small-Medium Business’ Summit had a very different feel. Attended by mostly corporate spectators it featured a panel discussion from Telstra’s CEO David Thodey (a very large business), the Shadow Minister for Employment and Workplace Relations Brendan O’Connor, Red Balloon CEO Kristie Buchanan and Birdsnest.com Founder Jane Cay. Discussion focussed on very practical topics such as use of social media for small business, global nature of Australian small digital businesses, the government’s support of small business (or lack of it) and some interesting ‘in the trenches’ stories from Jane and Kristie. Overall the discussion was further from the ‘edge’ than any of the sessions at SydStart in terms of small business innovation and investment however it provided very practical commentary on owning, operating and growing SMBs.

In the course of the two sessions there were a number of comments about the startup and small business landscape in Australia. Below are 4 comments charting the nexus between strategy and small business highlighting the importance of strategic thinking for even early stage businesses:

1) ‘Most innovation in Australia comes from small to medium businesses’ – David Thodey

As many large Australian businesses look to reverse disruption that has affected their core businesses or step ahead of the next wave of disruption it is easy to see how SMBs could be considered as the innovation engine room of Australia. This comment reflects the idea that as small businesses are lean, able to adapt to change and test and learn as a function of survival. For SMBs the ability to continue to innovate (business models, offerings and experiences) should be considered a key part of their strategy, particularly as they scale, attract new customers and attention of new competitors.

2) ‘Your investors should help you achieve your goals’ – Mike Cannon-Brookes

Strategy is as important to investing as the money itself. Whilst there is considered a funding gap for startups and SMBs in Australia between $500k and $10m, there is plenty of money for great ideas and most importantly those with strategy. It also works both ways where selecting an investor is about their ability to help achieve the wining aspirations of the startup. This may mean taking a reduction in valuation to get the right set of skills on board.

3) ‘I spend very little time thinking about my competitors or the government’ – Jane Cay

Running a startup or small business as a lean operation is hard work (packing boxes, managing accounts, responding to customers) which often means there is little time for strategy. Whilst most small businesses have business plans, setting time aside to think strategically (e.g. ‘where do we want to win?’ ‘where will we play?’ ‘how will we win with our offerings in the markets we play in?’) will allow for focus as scale is achieved.

4) ‘If you can’t smell the fire burning you haven’t sniffed hard enough’ – Mike Cannon-Brookes

Running on a lean operating model and building scale requires both an build and operate mindset. As you build, test and refine and transition to operate there are bound to be fires that need to be put out (e.g. revenue leakage, system failure, process breakdown). Executing on a strategy is always less than a perfect process, it requires time to test, learn and improve as you move towards your goals.

The is no shortage of good business ideas in Australia – in fact there are a lot of great business ideas in the startup/SMB community. However, for each great idea setting winning aspirations and defining the choices to reach those aspirations are as important for startups/SMBs as they are for Australia’s largest businesses. A well thought out strategy can enable innovation, attract supportive funding and advisor talent, bring busy founders out of the ‘day to day’ weeds of operations and set a course to test, learn and refine.



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