Why do you need a mission and business model when the going gets tough in your startup

Startup founder has to be a “jack of all trades” and master of everything –  he or she has to have a very broad knowledge and fix many problems at the same time. Sometimes however even “jacks of all trades” can hit the wall and feel lost when their startups grow and there are literally hundreds of business decisions to be made every day. In my interview with Magdalena Przelaskowska and Zofia Kłudka we discuss how mission statement and business model can help the startup founders to straighten things up.

Agnieszka: Startups in the growth phase face many new challenges resulting from larger scale of activities. They need to develop simultaneously in many areas: product, technology, sales, marketing, as well as funding and team recruitment.  Even most talented and determined founders can feel lost when they are overwhelmed with loads of business decisions to be made every day and they may sometimes end up in chaotic actions.

In such situations I ask the founders to remind themselves why they started their company in the first place and what they want to achieve. This usually helps. In other words we come back to the founders’ mission.

From my observation a simple mission statement can be a very powerful business tool, as it restores the sense of direction when we are lost in our everyday hustle. And what are your experiences with the mission statement and its’ practical application?

Magdalena: Mission statement helps to focus on what matters most. When business accelerates, many new challenges and tasks arise and often founders lose clear vision. First of all the mission of the company helps the founder to stay on track, but most importantly it also helps the whole team to understand why they do what they do. It motivates them to give in 100% into it. It also helps to recruit new team members – people who want to join because they believe in the mission and feel the urge to be part of that vision.

Zofia: Definitely! As Jim Rohn said: ‘The stronger the why, the easier the how becomes”. In a startup’s everyday life there are a lot of challenges and moments when everything looks too much to handle. In those moments especially the clear mission and ‘why did you start?’ motivate you to keep going and do it in the right direction.

Agnieszka: The mission statement gives a sense of purpose and direction but another question is to make money on what we do. And this is why every startup and actually every company needs to have a sound business model.

Business model template looks very simple, but when we take a deeper dive into it, it turns out to help us establish our entire business strategy: select our markets and clients, establish our value proposition, organize our activities and resources, select our distribution channels. And first of all – design our revenue and costs streams.

Some say it’s theoretical, but I have the opposite experience. When filled in with meaningful information it can show us how our company is organised to earn money on our competences and helps us to diagnose current deficiencies in our model. When you work with startups what are the first symptoms which indicate that they need to re-work their business model?

Magdalena: First sign is too many variations of the product or service. You can clearly tell that founders are unsure on what the end user wants and why.

Secondly, lack of monetization ideas. Founder might have in mind the product or service that answers the client’s needs but without any clue on how to monetize it. In those situations I always tell founders to go back to the user. Ask as many questions as possible. Why they use the product/service, what works and what doesn’t in their opinion. Once you understand your user, you can adjust the product or service to particular client segments and build the monetization strategy.

Zofia: I saw great ideas responding to actual needs on the market but lack of a suitable monetization model made them out of business. That’s while working with startups I always pay attention to this aspect. Founders or C-level teams should make sure that they know how to monetize their offer in their business model and at which level of users they meet the breakeven point.

Some global products may be profitable only with a large number of clients so it’s important to have a user acquisition strategy and funds for its implementation before you will be able to generate profits on your own.

In a market full of products and services the pricing scheme itself can be the source of value and differentiation, but you have to know very well your users to select the right pricing strategy that will make them satisfied and willing to buy more.

Agnieszka: When working on business models with startups and my other clients I see that the right customer knowledge is key to everything else. Lack of proper segmentation leads to mismatched value offers, wrong pricing, but also invalid distribution channels and sales processes.

Also one of the “aha moments” in my work with clients is when they realize that they were unable to recruit right people because they were not fully aware of their business model type and therefore they misjudged the competences they require on board.

The link between business model and right recruitment is not so obvious, yet those who finally realized it were astonished how much it helped them with identifying the right candidates for their company. What other far-fetched benefits of using a business model do you see in your work with startups?

Magdalena: Working on your business model helps to set a strong vision for your business, polish up the strategy, understand the market you operate in and map your customers. Thanks to that you can gain competitive advantage which leads to profitability.

Once you have a deep understanding of your business model you can adjust the operations, hire the right people with skills needed in key projects. This leads to increased effectiveness, happy clients and thus better business results. What I see in the ecosystem is that even if a startup has an excellent product or service without an appropriate business model it won’t accelerate the profits.

Zofia: Business models should clearly present your value offer, client segmentation and revenue and cost streams. When you know this, it is easier to identify positions and competences in your team and check if you are covering all essential needs. Getting back to the value offer you can see what is unique about your product, why you are different from similar offers and why clients will love your product.

Another important aspect of business model is that it can change and actually it should change over time. It’s a good practice to go back to it every e.g. year and check what has changed: are our clients (segmentation) different? how about our value offer – should we add new features, should we change the product? Maybe our revenue streams or key partnerships are different now?

It’s helpful to regularly and reflectively check where we are, what are our strong points, what are the  improvement areas, what is the value we are giving to our customers. Moreover, as the years will go by,  it will be a beautifully written history of ever changing reality 🙂

Agnieszka: Magdalena, Zofia, thank you very much for this interview. I hope it will inspire all startups which experience the pains of the growth phase and need to get back on track 🙂


About the author and the interviewees

Agnieszka Węglarz is an independent consultant, business strategist and practitioner in B2B and B2C, as well as lecturer, speaker and blogger. She has over 20 years of professional experience working as manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development. She uses her long term executive experience and training expertise to assist companies and their managers in building their business strategy using a workshop methodology. She specializes in business modeling, segmentation, value proposition, sales and marketing strategies as well as consultative selling. She runs her own consultancy business, as well as cooperates with Google for Startups Campus in Warsaw as the leading expert in Business Model Mastering – a Program for European startups providing founders and their teams with a structured approach to run their company and accelerate their growth. Agnieszka is an author of many business publications. You can read her writing on her business blog on www.agnieszkaweglarz.com and watch her business content on her YouTube channel – Biznes Ring by Agnieszka Węglarz. You can contact her by writing to: agnieszka.weglarz@g2m.biz.pl or directly by sending a message via LinkedIN.

Magdalena Przelaskowska, Senior Startup Partner Manager, Google for Startups

Passionate marketing expert with additional economics background from renowned London Universities. Worked at OMD International in London where she successfully coordinated pan-European offline and online branding campaigns for Sony CE before joining Google.  Started at Google EMEA HQ in 2011. In 2013 worked in Google Peru where she conducted analysis on the potential of South American markets as a new export direction for European companies.

From 2014 specialized in development of the business in Lithuania, Latvia and Estonia by focusing on export. Joined Google for Startups Campus in Warsaw as CEE Program Manager, one of six globally, in October 2015 to build and create programs that will educate and inspire startups to grow and go global.

Currently runs Google for Startup Accelerator: Europe and Israel where she provides access to the best of Google – its people, network and advanced technologies. Excited and frenzied about the entrepreneurship and startup scene. Recent graduate from Stanford University, Advanced Project Management. Windsurfer and Ski Instructor in her free time.

Zofia Kłudka, startup advisor and project manager.

She’s active in the startup ecosystem, having experience in working for a VR/AR startup Immersion and supporting development of European startups and their founders at Google for Startup Campus in Warsaw where she created business and leadership programs. Graduate of sociology and management, combining business knowledge with soft skills.