The first and most important task for any start-up is a two-page executive summary outlining your business model. In two pages, you need to be able to summarize the market, operations, management, and financial projections of your new company. It must have real information (not fluff and wishes), and it must build logically. The sections of the executive summary are the same for the lengthier business plan. They are as follows:
- Business Name and Legal Status
- Market Analysis
- Key Objectives
- Financial Objectives
- Market Opportunities
- Market Threats (Competition)
- Personnel & Staffing
- Management Team & Governance
- Pro Forma Targets (Financial Projections)
“Real information” speaks to the need to gather actual community data toward the representation of your market, the logic of your objectives, and the efficacy of your financial projections. Census data, consumer research, commerce data, and even verifiable observations made over time can provide a foundation of reality for your projections. Do not express what you think. Communicate what you can support with data
“Build logically” reminds you to connect each part of the summary in a logical chain of support for the business. By the time the reader gets to the Pro Forma Targets, he/she should consider the projections justified by the preceding discussion. While you write, continually ask yourself, “What does the previous section support?”
DON’T QUIT YOUR DAY JOB
There is a reason some of the most successful companies started in basements or garages: Low Overhead! Consider the financial swing from having a job and income of $2,500 per month to quitting the job and hiring a building at $1,200 per month. My advice is to keep your current employment situation while you build your business plan, secure capital, and develop your brand.
Yet, when planning to launch a business while working at another business, keep in mind the policies of your current employer. Policies regarding competition, secondary employment, and intellectual property are of the utmost importance.
Many employers, recognizing the demand for experienced professionals, now require some form of non-compete clause to be signed as a condition of employment. These contracts usually specify the amount of time that you must wait before engaging in an enterprise that could be seen by your employer as competing. Notice that most contracts allow the employer to determine whether the activity is a competing activity. For example, the employer may ask you to sign an agreement not to accept their former clients as your clients for a period of 2 years after separating from the company.
Some states outlaw the use of non-compete clauses. Employers in these situations may require strict, periodic reporting of your “outside” activities. This could include the amount of compensation you obtain from outside sources and a mandatory conflict of interest review by a risk assessment officer. Realize that not all levels of the human resources chain make this apparent during the hiring process. Read your entire contract and personnel policy documents to know what your employer allows, discourages, and seeks to monitor.
Most often, the concern on the part of the employer is to ensure that your business start-up does not infringe on your ability to complete your duties as assigned. You can satisfy this by submitting documentation that your secondary employment occurs during hours that you are not expected to work. For example, if you are employed 9am – 5pm Monday through Friday, you may carry out secondary employment from 7pm – 11pm. If you are on-call during the evenings, you can engage in secondary employment during weekends.
Another concern could be potential conflicts of interest. A conflict of interest exists when your interests compete with the interests of the company. It is important to make your employer aware of potential conflicts of interest and the steps you have taken to ensure that the conflict does not impair your performance, damage the company, or run afoul of ethical conduct. The existence of a conflict does not necessarily mean that the activity is unethical. Many companies have procedures for reporting and monitoring potential conflicts.
It is hard to believe that there once was a time when employers did not have specific policies for the inventions and advancements created by their employees. Generally, when you produce something for hire, the entity that pays you owns all the rights to that product. But, this has become an important point of concern, and sometimes litigation, in certain instances.
Many employers now have a thoughtful policy covering intellectual property rights. Intellectual property is essentially the question of rights to your creation—who owns it? It could be unique ways to prop open a door. It could be a line of programming code. Some have argued that it could be a process for checking out in an online store. Before you produce anything beyond your job description, familiarize yourself with the intellectual property rights of your employer.
Typically, your employer will claim explicit rights to anything you produce with their support. This means that if you use their computers, Internet connection, materials from the break room, copiers, or meeting room space, your employer may claim rights to what is produced. Employers also claim rights to what you produce while you are clocked in or reasonably expected to be “engaged in work for the company.” Be sure to complete paperwork detailing your entrepreneurial work as secondary employment. Do not use materials (even paperclips or recycle-bin bottles) in your inventions. Produce what is yours away from the employer’s offices.
BUILDING YOUR BRAND
When consulting with a start-up, maybe the most challenging task is to assist the entrepreneur to build a brand. A brand, in the sense of branding, is more than the logo or the product or service the business is known for. A brand is a warm feeling that the public gets from the smells, sites, or sounds that your business practices create. It is the association of your company with your product along with some amount of positive regard.
Once you have developed a solid business plan, you must consider your brand. The brand will be built over time, but it is wise to outline its trajectory. Considerations of your brand will influence strategy in hiring, priorities in production, emphasis on marketing, and targets for growth.
First, consider your product. Second, develop the infrastructure for production. Third, create a schedule and mechanism for communicating your impact. To launch you in this process, consider whether your start-up is producing expertise, service, or a product.
Conceptualizing Your Expertise
Experts come in many flavors. Your first task is to specify the outcome to clients who hire your expertise. Articulate the brand of expert you seek to be: Grant Writer, Evaluator, Producer, Subject Matter Expert, Blogger/Copy Writer, Trainer, or Motivational Speaker. Many more options exist.
If the product is expertise, credibility is of primary importance. Credibility can be communicated through degrees, affiliations, or experience. The greatest of these is experience. If you can effectively communicate your experience, you are closer to securing a contract.
Infrastructure for the expert will include a method to capture and present experience in an easily accessible form. For example, a motivational speaker may set up recordings of presentations she gives and post clips to a promotional website. A blogger may track unique visitor and interaction data among readers to demonstrate the value and influences represented by the blog.
A press kit detailing your credibility will be an important mechanism. In addition to a website listing contact information and examples of your work, a printed press kit is also desirable. As much as our world relies on digital copy, many still enjoy a well-developed printed presentation. Be sure to engage a print designer to take your skills and accent them visually.
Developing Your Service
When you launch a service, your primary concern is to provide the highest quality experience for the client. Consequently, this should be the first process you consider when developing your service. Create a process map, also called a service plan, which details the process each client will experience. The process map is a flowchart that utilizes specific symbols to communicate decisions, documentation, and other processes. Include all elements of the process including early exits, disciplinary actions, referral options—any procedures that any client may experience.
A curriculum or mechanism is the infrastructure of a service venture. It answers the question, “How will clients reach the goals your start-up has for them?” It should be specific. For example, if your service is training provided over 8 weeks, you must outline what each of the weeks will entail. Resist the common urge to simply write the topics that will be presented each of the weeks. At least describe the content, the activities, and the resources involved in each week. Other infrastructure for a service venture includes policies & procedures, a board development plan, an accounting plan, insurance & licenses, zoning considerations, and a fundraising plan.
I recommend that you keep these items in an organizational compendium. An organizational compendium is my phrase describing the storage place for program and organizational documents. The key feature of the compendium is that the items are centrally housed, digital when possible, and updated regularly. The compendium should be such that everything needed for a grant proposal, press release, or annual report can be easily accessed.
Constructing Your Product
If you are thinking about launching a tangible product, your primary concern is your market. Your market describes the clients who will purchase your product. You must identify a need and a way to engage the clients with the product satisfying the need. Before you move forward with the considerations of production, calculate whether the market can support your product. That is, figure out if there are enough potential customers to at least break even on the expenses of production. Consider adjusting your price point to increase the pool of customers.
The primary infrastructure for the production of a product is your development cycle. The development cycle details your contracts with suppliers, the development of content, packaging, distribution, billing, and client engagement. You will also want to plan for inventory storage, distributor requirements, support of products, marketing, and social media monitoring. Connect with the Department of Treasury in your state and local government to learn what sales and use taxes you may be required to pay on the sales of your product. Even states that do not require sales and use taxes may require that you report your sales activity.
Financial planning is an important consideration of impact when launching products. Calculation of the break-even is one task. Another is calculating what you need to make the venture worthwhile for you in comparison with other activities. Rather than a vague hope to “make money,” consider the lifestyle you desire. Calculate the amount of income required for that lifestyle. Reflect on the market calculations you have completed. If your market can bear your desired amount, set this as your target and plan your growth and investment accordingly.