As a devotee of project management, I firmly believe that ANY project, big or small, must use project management practices to succeed, whatever success means for the particular project. And the same philosophy applies to doing business, although running a business is officially part of operations. However, starting a business, growing a business, and surviving a major challenge, such as the one we are currently facing, are projects and need to be addressed.
Starting a Project for a Small Business
As noted above, whether you are starting a business, growing an existing business, or trying to survive a major challenge, you need to start with a concept. An idea of what you want to accomplish, followed by how, by when, and why (the need.) Of course, the “why” is usually “to make a living,” but you also need to determine and prove why it is not better than cutting your losses and closing up. The latter argument is not meant to be pessimistic but rather to get you to form a convincing argument of why your business is important to current and future clients since they are critical for your success.
Developing a Charter, which is often known to many as just the Business Case. This is basically the written concept for your project idea. The purpose of the charter is to provide a high-level project description. You and other stakeholders, including funders, can review and decide whether to proceed with the project, rework it, or abandon it. For example, if you plan to start a consulting business, you will include the following in your charter:
- Objectives: provide consulting services to clients in industries “X,” “Y,” and “Z,” including on-call and on-site services. Additionally, develop and market written material, such as templates, manuals, and standard practices related to my consulting services for client use.
The objectives are what you want to accomplish with your project, which, in this case, is to provide consulting services.
- High-level Requirements: you need to provide a list of what is required to achieve your objectives, such as staff; capital to get started, such as equipment, software, furniture, materials, etc., as well as the capital needed to survive until the business is profitable; and other resources required to get started, such as business licenses, certifications, accreditations, etc. The latter items might include, for example, project management certification, quality control certifications (i.e., ISO 9001), and so on.
- Product Description: using the example of the consulting services above, your product might include the following:
- Hourly consulting services
- PowerPoint presentations
- Manuals, guidelines, templates
- Certificates of completion, which are officially sanctioned as professional development
- High-Level Risks: identifying risks as early as possible not only helps you prepare for uncertainty and other pitfalls, but it is also a great psychological exercise on a personal level. Whatever is keeping you up at night can be addressed as a risk, which then allows you to prepare a mitigation plan, such as:
- Unsure about client commitment: in other words, you might be concerned that you do not have enough clients to get started and/or to keep you going. A mitigation measure could be that you request letters of intent from your clients and/or delay starting until you have the number of clients you determine you need to succeed.
- What if the staff does not perform as expected? This is also a risk for many new entrepreneurs starting. If you hire someone with whom you have not worked before, then performance issues might be a problem. Therefore, a mitigation measure is preparing a Plan B in which you have substitute staff ready to hire, should the original ones not work out.
- Schedule: for your own peace of mind, as well as to assure potential investors of how solid your business idea is, you need to prepare a schedule with deadlines, as well as intermittent milestones to gauge progress. You might include, for example, the projected break-even point when the business starts making a profit, when you can pay yourself, as well as other investors, back, and so on.
- Budget: the budget is critical to ensure you have the funding you need to get started, including renting office space, buying or renting furniture, or purchasing larger ticket items, such as laptops, printers, etc. Additionally, you need to include a reserve to pay salaries since your clients may take 30 to 60 days to pay their invoices. The budget needs to include a reserve for the first 6, 9, or 12 months, based on when you think you will start to see real profit.
- Key Stakeholders: as many of you may recall, a stakeholder is any interested party who can impact, be impacted, or perceive to be impacted by an action, activity, or project. Therefore, based on this definition, stakeholders can be numerous. However, the key stakeholders you deem will impact or be impacted by your project, both positively and negatively. So, for example, investors, if you have them, will be key stakeholders. Still, your spouse or significant other can also be a stakeholder if you require their support and assistance in achieving success. A competitor can also be a key stakeholder, but one who might be impacted by your project negatively can impact you if they can somehow hinder you and/or sabotage your plans.
In developing the charter, especially the objectives, it is important to use the SMART method, which means that you provide enough detail to:
Specify your objectives. So, don’t just say, I want to succeed in my business, but rather include:
- Specific: such as make $300,000 the first year, and maintain a good life-work balance, including spending evenings and weekends with my family, etc.
- Measurable: this can be tracked by adding revenue monthly to see if the $300k will be reached and looking at your schedule to see if you have had some downtime.
- Assignable: this means that your objectives are addressed and monitored by the write person or persons. In the above example, achieving the revenue goal will be your responsibility and perhaps staff and/or salespeople. Therefore, it will be important to explain to them what the goal is and develop a plan to achieve it.
- Realistic: is the $300,000 revenue goal in the first year achievable? Are the market and economy in a situation where this goal is feasible? In the end, this might be a guess because we may not be able to guarantee success, but we have to make realistic forecasts at least.
- Time-dependent: the end of the year is the time-goal; however, as mentioned in the schedule section above, you must also include intermittent milestones. If by the second half of the year you have only earned $90,000 revenue, you might need to adjust the plan and/or the $300,000 goal.
The project charter is there to help you get started and, if it is acceptable, allow you to move on to the next step, which is to develop more detail in the planning stage before executing the plan itself. Additionally, as noted earlier, but worth mentioning again, the charter will provide clarity and, if well drafted, assurances to your key stakeholders, including potential business investors.
Michael P. Doherty, PMI-ACP, has a long history of business development, financial strategies, and planning. He has launched and managed several ventures personally, so he understands the challenges of managing day-to-day operations in an uncertain environment. He strongly believes in adopting Agile methodologies to deliver customer value early and often consistently. His combined startup background, along with Agile expertise, allows him to help his clients deliver products in an efficient, cost-effective manner to meet the ever-changing needs of their users continually.