(Images | Courtesy of SCORE)
This is the story of NASA’s first Moon Landing, the recent proposal for a “Green New Deal,” and the founding of Tesla Motors. While it might seem ridiculous to compare and contrast such wildly diverse endeavors, common among them are three elements that might be the keys to small business success:
1) Bold Vision
2) Well-Conceived Plan
3) Adequate Resources
Bold Vision
Moon Landing—In May, 1961, then President John Kennedy presented NASA and the nation with a historic challenge: To put a man on the moon and return him safely to Earth before the end of the decade. The vision was primarily a political one. His address before a special joint session of Congress was packed with policy initiatives and was an attempt to refocus his presidency following two Cold War defeats at the hands of rival USSR. The first embarrassment, in April, was the result of a successful attempt by Soviet cosmonaut Gagarin in exiting the outer atmosphere and becoming the first human to reach space and complete one full orbit around Earth. The second embarrassment, also in April, was the disastrous Bay of Pigs invasion, ending with Soviet backed Cubans defeating the U.S. backed CIA trained invaders in only three days. With these embarrassments hanging heavily overhead, a dramatic vision and a lofty plan was set in motion that had the potential to restart a presidency and change history.
Green New Deal (GND)—On February 7, 2019, U.S. Representative Alexandria Ocasio-Cortez from New York’s 14th District, and U.S. Senator Ed Markey, from Massachusetts, released a fourteen-page resolution in Congress for their “Green New Deal.” This was arguably the boldest and most comprehensive approach to date for social reforms. The resolution includes calls for a “ten-year national mobilization,” with the primary goals including: Guaranteeing sustaining-wage jobs, medical leave, paid vacations’ and retirement security to all people in the US; Provide all people of the U.S. with high-quality health care and education including college; Convert the power grid to zero-emissions sources; Eliminate green-house gas emissions; Upgrade all existing U.S. buildings to achieve maximum energy efficiency; Eliminate agricultural pollution.
Tesla Business Startup — Tesla Motors was officially founded in 2003 by two engineers, Marc Tarpenning and Martin Eberhard. The company currently has a market capitalization of over $43 billion, making it difficult to image as a startup. The company’s original and sustaining mission was and still is to accelerate the word’s transition to sustainable energy. With this in mind, the two engineers used previous knowledge of battery technology, engineering skills and research into automotive manufacturing technology to envision an affordable, electric sports car that would challenge rival, 100 year old auto manufacturers at their own game. With previous heavily invested electric vehicle endeavors showing less than stellar outcomes, including GM’s recently recalled HEV program at the time, the new Tesla startup was an attempt to bring together existing technology to meet an emerging market opportunity.
Well-Conceived Plan
Moon Landing—America’s interest in space flight pre-dates post WWII 1950’s. The U.S. Military possessed well developed, low altitude, long range missile technology. Congress and the President of the United States created the National Aeronautics and Space Administration (NASA) on October 1, 1958. NASA’s birth was directly related to the pressures of national defense. NASA began to conduct space missions within months of its creation and quickly assimilated three major research laboratories, the Langley Aeronautical Laboratory, Ames Aeronautical Laboratory and Lewis Flight Propulsion Laboratory, providing NASA with over 8,000 employees and an annual budget of $100 million. Following Kennedy’s 1961 speech identifying the objective and time table, NASA conceived an overall plan of action and, as you might imagine for a moon mission, it was highly complex:
The Apollo 11 mission was perhaps among the highest risk undertakings in human history. From technical malfunctions to human errors, any number of failures might have derailed the entire project. There were over 60,000 parts in the hardware alone and a failure of any one of them would be disastrous. There were not only risks in the mechanical components, but there was also the human element. Neil Armstrong thought they had a 90 percent chance of survival, but only a 50-50 chance of landing on the first attempt. Buzz Aldrin was less optimistic, estimating 2/3 chance of survival and 1/3 chance of success.
Green New Deal (GND) — Among the most noteworthy similarities to other grand endeavors are the initiative’s aim to address climate change and economic inequality. Conceivably, the plan’s architecture would need to look similar to that of a moon landing. Although the GND has roots in Depression Era reforms, it also draws on the 2006 Green New Deal Task Force plan, climate change initiatives from the Obama administration, and most recently the Green New Deal wing of the Democratic Party that emerged following the November 2018 elections. With this rich history and organizational support, one would imagine much of the structure for the plan would be in place. In reality, it is the very lack of detail that has garnered sharp criticism. The exact composition of the GND is a matter of debate, leading the energy industry skeptical of its success and hesitant to wholeheartedly invest in the new proposed and unproven energy while still being charged with “keeping the lights on” with complete reliability. The health care industry and the general population are also skeptical of a single-payer system, akin to similar institutions such as Medicaid, and Government at all levels has been working for generations to provide family wage jobs to the disadvantaged with varied success. At this stage, the GND is a reference point for discussion, but without a plan, it currently may well be “lost in space.”
Tesla Business Startup—In the early stages of Tesla’s startup history, the two founders had a clear mission. They identified the key technology and had a working model to demonstrate the capabilities of their idea. The plan was tempered through a series of presentations to potential investors and through persistent research. Their unique plan included:
1) Direct Sales—an international network of company owner sales rooms with no middle man between the manufacturer and the end user. This eventually paved the way for the introduction of direct internet sales.
2) Service Centers and Service Rangers (service technicians) that can provide service at the customer’s location.
3) Supercharger network—Tesla has created its own network of Supercharger charging stations where drivers can fully charge their Tesla vehicles for free in roughly 30 minutes or less.
With any business startup or expansion, the numbers favor a detailed plan. In a recent survey of 2,877 small business owners, conducted by Palo Alto Software, it was determined that a well-developed, researched and organized business plan has the potential to double the chances for long term success. The survey showed that nearly twice as many businesses were able to secure a loan or investment capital when they displayed a completed business plan and that 20 percent more businesses successfully grew further compared to those without a plan. The survey’s authors concluded that, “Except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.”
https://smallbiztrends.com/2010/06/business-plan-success-twice-as-likely.html
Adequate Resources
Moon Landing—
Financial Resources: The Apollo mission cost $25.4 Billion USD, equating in today’s dollars as roughly $150 Billion USD or four percent of the National budget.
Technology Resources: While the Apollo program pushed technological development forward in many aspects, the most significant was NASA’s pioneering research into integrated circuits. Prior to Apollo and other closely related programs including the Minuteman intercontinental ballistic missile, the smallest computers were the size of entire rooms. Due to obvious weight and volume constraints, the Apollo Command Module and Lunar Module would need significantly downsized computer control systems. The pioneering technological developments that allowed this feat paved the way for an exponential increase in processing power in the coming years, culminating in technology including the cell phones that we carry in our pockets with processor clock speeds exceeding 1.8 to 2.2GHz. A processing speed over 1,000 times faster than that of the Apollo Guidance Computer.
Human Resources: Thousands of personnel were involved in the moon landing, from scientists to dishwashers. The crew of Apollo 11 were all experienced astronauts who had completed multiple space missions and were trained in myriad areas of flight as well as psychological, and technological aspects.
Green New Deal (GND)—There is an ongoing debate surrounding the resources necessary for implementation as well as the complexity and lack of a detailed plan regarding many aspects of the GND.
Financial resources are estimated between zero and $93 trillion USD. The top end estimates include costs of clean energy, high speed rail, job guarantees, health care reforms, green energy and food security. The cost neutral number is described by those who believe that the benefits from the impact on each affected area will neutralize the actual costs. As is common with many “broad policy” issues, the reality of cost may fall somewhere in the middle at $50 trillion USD.
Business Startup— Starting a small business is a complex process that requires significant resources. Not only is there a requirement for money and related materials, but there is also a significant demand for time, energy and commitment. While becoming an entrepreneur is the dream of many people, it takes hard work, a team of professionals ready to assist, and the support of friends and family to turn the dream into a reality. Whether the goal is to start a new business or expand an existing business, important resources are required, but not limited to:
Capital: Small businesses need an infusion of capital in order to operate until the business starts making a profit. Usually, the business owners make a capital contribution to capitalize the business — or start with nothing and bootstrap their business with hard work and tight belts until it begins generating income. Loans from friends and family, bank financing and grants or loans from nonprofit organizations are other common ways that entrepreneurs secure startup capital to launch their small businesses.
Expertise: No small business owner can start up and succeed without a support team that includes expertise in law, finance and marketing. A sharp accountant can save you money and make sure you avoid trouble with taxes, while a savvy business attorney can help make sure you secure valuable rights in your products and marketing materials. A mentor can provide the invaluable wisdom of experience. Mentors and connections to people with small business marketing savvy can often be found through SCORE, a national nonprofit associated with the U.S. Small Business Administration, or through state or local nonprofit small business development centers.
Management and Plan: A successful small business starts with a business plan. The business plan establishes a road map for moving your small business forward. Writing the business plan allows you to assess your capabilities for managing the growing business. A startup small business typically needs a person who is dedicated to running the business on a daily basis and for long hours, including on weekends. While a new business owner with substantial resources may be able to hire managerial assistance, the person working the 80 to 100 hour weeks in most startup small businesses is the owner.
Marketable Product: A startup small business needs a marketable product or service. The small business owner must acquire the expertise as well as any professional licenses required for many service businesses, from cosmetologist to attorney. Developing a new product requires capital for purchasing inventory or raw materials, as well as acquisition of skills in packaging and marketing, production at the scale necessary for profit, and safety considerations, especially for products like food. Test-marketing and producing samples to entice wholesalers into picking up the product may be necessary, depending on the type of business. Time and money must usually be spent on market research, discerning consumer’s needs or wishes and creating a unique product or service that fills the market niche.
Summary
Starting or expanding a small business is no small task. The entrepreneur will have a much higher chance of success by taking time to create a 1) Bold Vision, 2) Well-Conceived Plan and 3) Adequate Resources. The consequences for not doing so is at best not progressing past the concept stage and, at worst, catastrophic failure. A bold vision and adequate resources led to NASA’s domination of the space industry, a rapid growth of space exploration and understanding, and advancements in computing that continue to shape technology to this day. A well-conceived plan gave Tesla the organization and strategies necessary to rapidly expand from a small upstart company, with the previously unachieved goal of successfully commercializing electric vehicles, into a dominant force that has shaped and transformed the entire automotive industry. With summer and the accompanying growth and networking potential fast approaching, in which of the three areas discussed might your small business need a refreshed approach to bring newfound growth and success in 2019?
Bruce Barrett is a Certified SCORE Mentor with SCORE Central Oregon and a Broker with Windermere Commercial Real Estate.
