The basics of business startup

It’s the end of May and your Memorial Day picnic plans are probably falling into place even as you read this. If you’re flirting with entrepreneurial dreams, there are other plans you need to corral as well: Your business startup steps.

Today’s column is the fourth in a series for May, honoring National Small Business Month. Earlier installments focused on three different audiences: Those starting a business early in their careers (primarily Gen-Xers and Millennials), those using a business to ramp down from a career (primarily Boomers) and those who want to transition a side hustle into a more structured business.

As diverse as those three groups are, their members have at least one thing in common: If they want to run a profitable business, they’re going to need a plan.

In this case, I’m not talking about the ubiquitous “business plan” that everyone seems to push at entrepreneurs. I’ve been heretical on this point for 30 years, so I might as well keep it up by saying the traditional concept of a business plan is vastly overwrought.

Of course you need to plan. But to imagine you can build a blueprint for a business you’ve never run, with resources you don’t yet have, for customers you’ve only imagined…not so much. The major exception I make in this analysis is for enterprises that are resource-intensive and for which investors or large sums of the entrepreneur’s funds will be needed. In these cases, every possible safeguard is needed, including as detailed a plan as you’re able to create.

That said, those are not the majority of businesses started and operated every day in the United States. Far more common are the oneor two-person delivery services, lawn-mowing operations and consulting outfits. For these, I’d favor a series of interlocking and evolving strategies rather than a formalized plan that takes months to complete while sapping the entrepreneur’s enthusiasm.

The number of such strategies could be almost endless, but I’ll start here with five that I find critical for a good launch. To make it easier to navigate the list, I’ll present the strategies as steps. Note that these don’t need to be done in the order shown, since you’ll be refining each area continuously throughout the launch and for the life of your business.

1. Define your product or service. This is your chance to dream, but you’ll also need a dose of that dreaded reality. To honor both aspects, think about your core product or service in stages or families – which parts would be easiest to start with, which can be introduced later when your business is off the ground? It’s hard to overresearch at this point, as you need all the information you can find on similar businesses, processes, materials and potential markets.

2. Assemble your team. You’ll need an inner circle of advisors (attorney, accountant, etc.) as well as key vendors (web designer, publicist, etc.) and people to help you deliver your product or service (staff, partners or contractors).

3. Identify and find your customers. This is not quite marketing and not quite selling – which are each their own strategies, by the way. This step is more about imagining your ideal customer and then actually finding him or her.

If you plan to sell to businesses, for example, then the customer is someone working for certain types of companies. If you want to serve individuals, then you must learn what defines them as a group so you can better target both your product and your marketing.

4. Marshall your financial resources. The best way not to lose more than you can afford is to know that number before you start. Decide how much you have and strategize accordingly. If the figure is quite low, you might need outside employment to cover your salary, allowing you to return to the business almost all the initial earnings.

5. Plan out the first year of the business. Whether full-time, seasonal or some other variation, your business will be more productive if you’ve envisioned goals and processes that extend out a ways. That said, unless it’s a resource-intensive business, there’s not as much value in building multi-year plans. You simply don’t have the data to forecast well. So be sure to capture that data as you go along – then you can make adjustments as your product’s true market reveals itself.

A final piece of advice? Take the leap. You may not be “ready” but that doesn’t mean you can’t dip your toe in the water. Take the risk you feel you can afford and enjoy the fun of running your own business, whatever shape it may take.