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Death by Revenue Plan

No revenue plan survives first contact with reality, and trying to implement it too rapidly can and does kill startups. One common pitfall is to mistake a new market-oriented company for an existing market-oriented company, and then planning accordingly. The mostly linear revenue graph for an existing market company should look very different than the hockey-stick-shaped graph of a company in a new market, and often times neither founders nor investors recognize that a new market company will take longer to develop than one in an existing market, leading to conflict and unmet expectations.

Key Takeaways:

  • Incorrectly executing the Revenue Plan of a startup can cause serious issues for an emerging company.
  • Company executives often follow Revenue Plans without thinking, and implement drastic policy in order to stick with it, even if it is not genuinely constructive.
  • It’s best to focus on the needs and realities of the market when coming up with a spending plan for a startup.

“Prematurely scaling sales and marketing before adequately testing your business plan hypotheses in Customer Discovery is just one common mistake startups make.”

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