If you are into starting businesses or if you are a true entrepreneur, you know what it’s like to fail and to fail repeatedly. But when we hit it we hit it big and that’s why we keep doing it. What are my six steps to a startup? I understand business plans. I have read the book Business Plans for Dummies as well as very exhaustive books on creating a business plan. By this point, I have my own abbreviated six steps detailing what I need to look at before I start a business or before I really know whether this is something I’m going to go forward with.
- The Idea
All small businesses start with an idea. I get an idea. I either notice that there is a product that is needed or a service that isn’t being offered. In other words, I find an opening in the marketplace. I feel like I have a solution to it.
- The Vetting Process
Once I have an idea I begin the vetting process in which I test my idea to make sure it’s as good as I think it is. I have ideas all the time. My family constantly laughs at me. The quote that they will always share is when I say, “This is my best idea ever. Ever.” Then a week later they ask about it and I say, “Wasn’t as good as I thought,” and they laugh. However, the one thing they also say is, “If dad has a good idea then we’re all going to benefit from it because normally they are profitable ideas.” I do have a vetting process that I am going to go into greater depth on next week, but to briefly summarize it here:
- Evaluate my competition
- Find out what my cost to engage my business will be. What is it going to take to get this thing going?
- Confirm that there’s a demand for what I think I have discovered by doing research.
- Do some test marketing.
- Do what’s called hiring easiness. In its simplest form I want to make sure I can get a team together and put them on the field.
- Make my exit strategy. What would it take to dissolve this business and how fast?
- The Business Plan
Once I’ve vetted my idea, I start formulating my business plan which happens in two phases. I have a static plan, which is where I set goals as to where this business could be in a year, two years, and five years. What do I see this business turning into based on what I have found in my vetting process? This may be where I put together my mission and vision statements. What do I want the company to be and what are my goals for this company? How much money do I think we can make on this? This is all on paper, a static plan.
Second, I create my active plan. This is essentially my battle plan; how am I going to make it happen? This typically involves what kind of team I’m going to need, what’s going to be my marketing plan, and how am I going to operate the business. I have my static plan and my active plan which make up my business plan.
- The Team
My fourth step in creating a startup is to begin putting my team in place. I find out the position players I’m going to need. These are my super-skilled people who have a clear understanding of the industry that I’m going in. This is where I bring in expertise to operate the business as I don’t normally run my businesses day to day. I create things. I’m a catalyst. I motivate, I excite, I get the team on the field, I get the schedule going and then over time I work my way out so that I can do what I do best. Therefore I have to have a great team and I need to figure out what it’s going to take to get my team in place and whether I can even get that team.
- The Timeline
Once I have my team in place, have my plan and have vetted my idea (Again, it all started with a great idea.), I need to execute the plan. This is when I put together a timeline for starting this business. How long is it going to take? Can I get it up in 90 days? Is it going to take six months? What’s it going to take to execute the plan? I may need to get the money together, required lines of credit, or maybe there are some licensing or facilities we need. Basically, I’m executing the actual plan to run the business. We’re up and at ‘em. This is when we’ve set a start date to launch it. We’ve put together the necessary timeline and we’re executing what it’s going to take to make this a breathing business.
- The Review Date
This is so important. Prior to starting a business, I put together a review date. If I know I’m starting a business on September 1st, for example, I may say review this April 1st. I put this in my phone to remind me that I’m going to have this meeting. This meeting may be with myself or it may be with my partners or key staff. Either way, we’re going to sit down and go back to the static plan.
Remember, in the static plan we set goals such as what we should be making, how much it will cost to operate, and whether we can achieve the goals that we set like being top three in our marketplace. At some point, whether it’s six months a year, or maybe you decide to have four reviews every three months, you’ve got to start critically analyzing whether this idea, now that it’s running, is as good as you thought it was. I’m going to let you in on a secret; one out of every two of mine are never quite as good as I thought it would be.
So when I review it, I go through three simple questions. Do I want to continue it? Do I need to adjust or modify it? Do I need to get rid of or unload it? That’s why I establish this review date prior to the launch and I hold myself to it. It keeps me from having delusions about how well the business is doing because I know and my staff knows going into this business that we are going to review this. We have established some measurements for success.
If we sit down and meet and we’re not even close because we’re spending too much money to obtain customers or profit per client or per customer isn’t near what we thought it would be, we’re going to have another look at this. Because we’ve established what it would take to close this business up, if that’s an option that we conclude we need to take, we’ll follow it.