You are considering starting a small business. Most startups fail. So why should yours be any different. Any strategist will tell you that there are many factors that contribute to the success or failure of any endeavor, but the one factor that will guarantee failure is lack of a realistic detailed action plan.
Step 1: Set Realistic and Specific Goals
The key to knowing what goals are realistic and specific is experience. In an established business, past history provides the clue. In a franchise, the franchisor can help you set realistic and specific goals based upon years of experience in the industry. For an independent startup, much research is needed. Talk to other businesses in the area you are considering opening your business. Talk to other business owners in your industry. You will want to ask about customer traffic, revenues, and costs. Then set your goals in each specific area.
Step 2: Identify Activities, Resources, and Responsibilities
I know it worked for Kevin Costner in Field of Dreams, but in the real world, if you build it, no one comes. You have to inform your customers about what you do and why they should patronize you. In many startups you have to lure your first customers in using couponing and special events. Identify the specific marketing and sales activities that will bring your customers in. Have a detailed list of all resources available in your area such as signage, media, and public relations. Outsource what you can. Hire when necessary. Do it yourself if you must. Have a detailed list of responsibilities for each activity and hold your contractors, your staff, and yourself accountable.
Step 3: Define Your Timetable
Your timetable is often closely related to capitalization. Industries have time-tested standards for profitability. A house painter may be profitable in 6 months, but a restaurant takes 3 years to be profitable. If you are considering investing your life savings and need to be profitable in the first month to make your mortgage, find a less expensive business to open. Chart your course carefully.
Step 4: Create Contingency Plans for Other Possible Outcomes
General George Patton once said, “Every plan is perfect until the first shot is fired.” What is your contingency if you get a different result than the one you planned for? If you run a special expecting 20 sales of a particular item, what is your plan if you sell 10? What if 30 people want the special? Always have a plan to liquidate excess with minimal or no loss, or to get more product quickly if needed. If you have done your marketing correctly, people will show up wanting to do business with you. Don’t disappoint them. If there is a piece of equipment that is critical to your business such as a brewer in a coffee shop, know where you backup is. That doesn’t necessarily mean you have another in the cabinet, but have a relationship with your repair service so you can rent one within the hour.
Step 5: Merge your Plan of Action with your Timetable
Every plan must be linked to a realistic and specific timetable. In step 4, you set a timetable to reach the overall objective you identified in step 1. Now, set specific milestones linked to the activities you identified in step 2. These can be graphed with project management software, or a simple outline will do. Just make sure you have identified which tasks need to be identified first before others can be started. Think these through carefully. Building from the bottom up makes sense, but don’t lay your carpet before your roof is finished.
Step 6: Delegate, Supervise, and Evaluate
Launching a startup is a daunting task. Often first time entrepreneurs take on too much themselves and burn out. Then they look for someone they can turn the reigns over to while they focus on what they enjoy most. This is called management by abdication and usually ends in disaster. To implement the plan, the entrepreneur needs to focus on delegation, supervision, and evaluation. This gets the job done faster without burning out the owner.
Entrepreneurship is hard work and high risk. So why do so many try it? Because there is nothing quite as rewarding as building a business that can run without you and provide you with financial security for a lifetime. It may seem the odds are stacked against the first time entrepreneur, but a good detailed action plan goes a long way to level the playing field.