By: Bob Crutchfield

Just about everyone knows what an SOS distress signal means. It means someone is in serious trouble, not just having a minor problem or a bad hair day. But most major distresses in business, and life for that matter, rarely occur spontaneously. They happen as a result of a series of decisions that lead to a crisis.

One of the best-known SOS stories is the ill fated, maiden voyage of the Titanic. What most of us remember is that the state of the art luxury liner tragically hit an iceberg in the frigid waters of the Atlantic Ocean. However, the disaster was the result of previously made decisions. After the Titanic had been sailing for 4 days, it began to get multiple ice warnings from other ships. The captain and crew ignored the warnings and continued on full speed ahead. At about 11:40 p.m., the watch was about to change. The watchmen spotted an iceberg! They quickly told the bridge to turn, but it was too late to prevent the Titanic from scraping against the side of the huge iceberg.

The Titanic’s captain sent out a distress signal- SOS- just before it sank. A nearby ship, Carpathia, received this signal and rushed to the scene. About 700 people were saved from the wreckage, water and lifeboats. All of the deaths occurred because existing codes did not require enough lifeboats for the passengers and crew. Hindsight is 20/20, my Mother used to tell me, and there is a business application here. Had the captain of the Titanic taken simple preventative actions, the wreck could have been averted.

Early stage entrepreneurs should take heed. We all are racing forward at Mach 5 with our hair on fire. Our rugged pioneer spirits tell us we can face and overcome all challenges and hurdles. But if this is true, why do most start-ups fall short of their dreams for success? I believe it rests on S.O.F. disciplines; Sales, Operations, Finance. Every single business has a targeted customer, an operational approach to reach that customer, and a financial reality with regard to these activities. Think about it. There is not one start-up company that cannot relate to these common business denominators.

At Third Trimester Venture Management, our approach is to look at behaviors around S.O.F. At the end of the day, individual actions create results. When we look at companies, our focus is always on the behaviors that are critical to the sales, operational and financial objectives. We also look for how these activities are measured and if they are linked to create the best results.

An example of what I am talking about can be seen in a company I recently took a look at. The company was an early stage, service company in the healthcare reimbursement arena. They had discovered an area of claims management that was challenging for hospitals and had created a solution. The company had four employees and two active accounts that confirmed their business model. They were seeking seed capital for expanding their sales and marketing efforts and the associated infrastructure needed to service their customers.

My first question to the President of the company was how do you measure the accuracy of your sales forecast? In other words, how do you know that the accounts you have targeted for closing in August will actually close? He looked at me as if I had asked him to predict the global warming patterns for the universe over the next decade. What I really wanted to know is have you identified the steps in your sales cycle, have you put metrics in place to manage the sales cycle and are you using this information to create more accurate forecasting for your business? It quickly became clear that he intuitively knew the steps and had a mental forecast, but he did not have it in a form that others could see.

The problem with his approach is that sales results created operational mandates to deliver on the services new accounts were expecting. There was a lack of linkage between operations, finance and sales. And this was a business of only four people. Without aligning the behaviors of the individuals in this small company, they were unknowingly limiting their success because they weren’t building a model that was predictable, repeatable and duplicatable.

So, I am sending out an S.O.F. to the world of early stage entrepreneurs. Build discipline early and it will assist you in expediting your growth and demonstrating to customers, investors and employees that you are serious about what you do and how you do it.