Startups Need Defined Goals. And Deadlines.

Startups Need Defined Goals.  And Deadlines.
Contributors:
Lucille Wesnofske, Director
Small Business Development Center at
Farmingdale State College
Doug Boyce, Director,
Small Business Development Center at Binghamton University

Sitting on the fence is not living on the edge.  For start-up businesses, the clock begins to tick as the idea begins to form.  One of the most difficult processes for any start-up businessperson is turning an imaginary concept into an action plan.  “How do I get from A to B?” is the common question.  And, by the time a would-be entrepreneur has made the decision to go for it; the dream may have become obsolete either through technological advances or even new local competition.  If the decision is to proceed, there are goals that must be defined.

In the United States, about 675,000 new businesses are created each year.  Unfortunately, more than 80% of start-up businesses do not make it to the fifth year.  The primary reason is lack of planning.  Dreams evolve into goals with the development of a business plan.  This concept of business plan can not be overly stressed.  It is a road map, a timeline and a deadline.  It is a feasibility study in which dreams are broken down to nuts and bolts.  It is a working document which requires periodic review and revision as the business progresses.  Too many entrepreneurs fail to develop and follow specific short and long term realistic goals – the business plan. 

Most successful entrepreneurs are self-motivated, energetic, creative, visionary, profit–oriented, above average in communication skills and controlling.  Although these characteristics have a positive impact during the conception and birth phases of development, several can become negatives if not recognized for what they are.  Entrepreneurs have a tendency to need to be in control and many have difficulty in delegating.  They go into business and quickly lose focus as they become all things rather than concentrating on core competencies. It is important that a full self assessment of skills be done to help recognize what areas are weak and will need outside help.  i.e.  The entrepreneur may be strong in marketing and weak in finance.   Staffing needs should be identified.

Competition is always underestimated.  A startup businessperson may not realize how difficult it is to convince customers to change vendors or how deeply entrenched competitors are in the marketplace.  An analysis of the market will help determine if there is sufficient unfulfilled need.  A product or service must have a “unique selling proposition” that differentiates it from the competition.  The startup businessperson must answer the question “Why should I do business with you rather than your competitors?” 

Other considerations in setting realistic goals should be: prior experience in the type of business being started; family requirements and expected support; the economic outlook for the industry as a whole, and the personal sacrifices the startup businessperson is willing to make.

Finally, of all other things considered, cash flow is the most vital component of any startup.  Few new businesses are properly capitalized and most do not realize a profit through the first or even second years.  Capital sources can vary from personal equity, to friends and family, to lending institutions.  Lack of oversight or sloppy control of expenses can choke any startup business and prior to raising outside capital, an accurate assessment of capital needs is required.  Planning cash flow needs and sources should warrant a separate section of any startup businessperson’s plan.

Wesnofske is Director of the Small Business Development Center at
Farmingdale State College and can be reached at
SBDC@farmingdale.edu or 631-420-2765


Boyce is Director of the Small Business Development Center at Binghamton University and can be reached at sbdc@binghamton.edu or 607 777-4024