Three times in recent weeks I have been asked the question: “Is LinkedIn useful?”. All three people had a service offering (lawyer, designer, facilitator) and were on LinkedIn, but had less than five connections. My response in all three cases was: “Yes, but not until you have at least 120 connections. Reach that milestone then ask the question again”.
Which got me thinking about milestones. I regularly meet with small technology startups which aren’t particularly profitable as yet, so they tend to talk about non-financial milestones they have achieved. Product Launched, First Sale, Press Release picked up, etc. And when someone rolls out a milestone to me, the first question I ask is: “so what did you learn?”. The response is normally silence… plus a half smiling, half nervous look that means “Is that a trick question?”.
You see milestones, like way too many other business concepts, have been dumbed down for consumption by the mass market (bloody marketers and television to blame for this as usual). A milestone is generally perceived as something you can be proud of, a moment that you can reflect on and perhaps pause to take a breath.
Which is great, but it misses its true value.
When you plan any new activity (eg. your business plan), you make a number of assumptions. Milestones are the points on the timeline of that activity where you get to review your assumptions to see whether they were valid, or you need to change your plan. They are not just picked randomly to make you feel good… for instance:
On completion of a prototype, ask:
* Did it take you as long to build as you estimated, or longer?
* Did it cost you as much to build as you expected?
* How will that affect your business plan, including production model and profitability?
* Do you need to alter the attributes of the product?
* Do you still have the same value proposition that you expected to have?
On first sale, ask:
* Was the sale cycle as long as you expected?
* Did you get the price you forecasted?
* Did you get the quantity you forecasted?
* Did your customer accept the value proposition?
* Do you need to alter your plan?
On having to change your pricing, ask:
* Is it a permanent change or temporary?
* How will it affect your cash flow projections?
* Do you need to adjust your fixed or variable costs to maintain your profitability?
* Is it a new segment that the offering can be isolated to?
So milestones shouldn’t be arbitrary at all. Go through your business plan and determine what the assumptions are and how you will test those assumptions. These are your milestones. Then make sure they are included in your management meetings or business review process.
But back to LinkedIn. My rule of thumb (my assumption) is that around 5% of your network (the network you have mind share with) will generate opportunities for you in any year. Therefore, if you have 120 connections on LinkedIn, one new opportunity should come your way every second month.
The thing is, when you reach the milestone, you can test your assumptions (or my rule of thumb). If it’s wrong, you can readjust your plan. Maybe you need 250 Linkedin connections to generate an opportunity every second month or maybe you need only 60.
Get it? They’re Milestones, not Millstones.
Brendan Lewis is a serial technology entrepreneur having founded : Ideas Lighting, Carradale Media, Edion, Verve IT, The Churchill Club, Flinders Pacific and L2i Technology Advisory. He has set up businesses for others in Romania, Indonesia and Vietnam. Qualified in IT and Accounting, he has also spent time running an Advertising agency and as a Cavalry Officer with the Australian Army Reserve.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
Comments