The Business Start Up
How to Plan Your Planning
Your business start up, to be successful, must be guided by a comprehensive plan. This section of the website will guide you through the considerations that you must adequately address in order to launch a successful traditional (offline) business. If you are contemplating an online business start-up, click on the "ONLINE BASICS" button on the horizontal navigation bar at the top of this page.
Offline business start ups are always more expensive than their online counterparts, so the risks are greater and the need for good planning is more imperative. On this page you will find a brief summary of the considerations that you need to think about in order to minimize those risks and maximize the likelihood of your success. Each of the topics below is discussed more fully on the corresponding page linked to the vertical navigation menu in the column to the left.
On this page you will find introductions to these topics:
- Setting Goals
- Basic Choices
- Preliminary Advice
- Assessing Initial Resources
- Capital Requirements
- Possible Sources of Funding
- The Action Plan
- The Financial Plan
- The Management Plan
Each of these considerations is crucial to the success of your offline business start up, So, please don't skip or ignore any of them. To do so could cost you everything you hope to gain by launching a new enterprise.
"Why set goals?" you might ask. Many years ago one of my millionaire mentors asked me this question: "Bob, if you don't know where you are going, why would you expect to like it when you get there?" He had a point - one that you would do well to take to heart as you contemplate your own business start up.
There are right ways and wrong ways to go about setting goals. Pick the wrong way and your goals become illusory, mere useless fantasies. Go about it correctly and you will have laid the foundation for a successful business start up. The "Set Goals" page of this site will teach you how to do this.
Once you have set your goals, you will face some important choices regarding early decisions that must be made at the outset of your business start up planning. The "Basic Choices" page of this site outlines what these choices are and why they are important. Any one of them could spell the difference between success and failure.
You don't want failure, so every hour that you invest in this planning process could mean millions of dollars in future profits gained or lost. The folks from whom I learned these lessons built businesses each worth hundreds of millions of dollars. There is no reason you cannot do as well if you take their advice to heart and apply it conscientiously.
Some Sound Preliminary Advice
If you set your goals too low, you won't be motivated enough to do the work involved in reaching them.
Not infrequently, success in your "ultimate" business will require that you first succeed in a "lesser" business. This latter business will then produce the resources you need to successfully launch the former. The "My Best Advice" page, linked in the menu to the left, provides a detailed examination of this issue, along with sage suggestions from some of my wealthy mentors. Unless you are already really wealthy you should find these suggestions helpful, though they are somewhat counter-intuitive to many.
Assessing Initial Resources
Every journey, including the business start up journey, must begin where you are. If you live in Chicago and you want to go to Honolulu, you cannot start from Los Angeles. You have to start from Chicago. This seems obvious when stated this way, but many aspiring entrepreneurs, myself included, have made the mistake of trying to ignore this obvious principle. The result of this mistake is invariably failure, at best. Sometimes it is much worse!
So, count your blessings, that is to say your assets, and postpone going ahead with your plans until you are sure you have the resources you need to give your business start up a fighting chance.
Have you heard it said that it takes money to make money? This statement is not true - IF - you are starting your business very small; in which case you can start on a shoestring, though I don't recommend it. Even the smallest imaginable business requires a little money. I suggest you don't even think about starting a micro-business until you have at least $500 in your pocket; and then do it online where business start up costs are much lower than offline.
For your offline business start up, you need to be sure you have enough capital available before any significant action is undertaken. The "Capital Requirements" page of this site will get you started on this analysis; then you will need to consult an appropriate accounting expert and/or investment banker to be sure you've got your numbers right. If you cannot afford such consultants, perhaps you should think twice before starting an offline business. Remember, under-capitalization is the most common cause of failure in traditional offline business start ups.
Possible Sources of Funding
Once you know how much money you will need (above and beyond your own personal monetary investment), you can begin planning where and how you will attract OPM (other people's money). The basic possibilities are grants, loans, and equity investments, each in multiple varieties. Each of these source types brings with it an assortment of pros and cons. Don't make the wrong choice in this. You will regret it later, I promise you.
So, study the "Possible Sources" page until you have a good handle on what is at stake, and plan accordingly.
The Action Plan
If someone told you that you need a business plan, they were wrong! You need three business plans. The first is your "Action Plan". This plan is primarily for your own use, though some portions of it may be copied into your other two plans. The Action Plan lists what you must do and when you must do it in relation to other actions.
This list comprises the core data of what is called the "critical path" in project management language. The items on the list must be in the right order, each action being required in order to complete the next one on the list. Often an item on the critical path must be completed before the next item on the list can even be properly begun. Action items that are not in the critical path should only be included in the Action Plan if they are complementary to the critical path, otherwise they are either optional or trivial. Deal with them elsewhere.
The Financial Plan
The Financial Plan, while it will indeed be useful to you, is primarily for the study of the people from whom you want money - either as a grant, a loan, or an equity investment. As such it must be carefully tailored to its readers, containing all the information and only the information that they will want to know. This plan generally becomes the complete business plan when properly combined with the Management Plan discussed below.
The Management Plan
NOTICE: Please be Patient
This website is undergoing a major remodeling and this section, on offline business starts ups, is being expanded almost daily, as the new pages are written.
During this transition there are often dead-end links to pages not yet available online. For this I apologize, though the alternative would be to withhold all this useful information until the entire section is completed - an alternative that leaves much to be desired.
To alleviate this inconvenience somewhat, I invite you to sign up for the RSS feed using one of the links in the narrow column to the right. If you do this, you will be notified each time I upload a new page.
- Cordially, Bob Podolsky
While lenders usually concentrate most on evaluating your financial plan, equity investors are generally more interested in your management plan. They want to know that you know what you are doing and that you have lined up a team of partners, associates, consultants, and/or employees who collectively can be counted on to provide the personnel resources that will be needed for your success.
As with the topics above, a separate web-page is provided herein to explain in some detail how to put together a persuasive management plan. Once again, important choices are involved.
If you are ready, let's set some
business start up goals.