Setting Up Your New Small Business: Defining Your Goals

During the first month of every academic semester, I get several calls from graduate business students across the country. Typically, a professor wants them to “start” a company and, therefore, write a comprehensive business plan that shows growth to sales of $800,000 in three years or something like that. Those with computer backgrounds find that a computer consulting company is a logical business for them to start. Students ask me questions like:

  • “How do I get material for a competitive analysis?”
  • “How can I find a fertile market and position my company for growth?”
  • “What type of marketing efforts are appropriate for computer consulting?”
  • “What kind of financing do I need, and how can I get it?”

This year, something hit me. Of all the computer consultants and small companies with whom I interact and have as clients, only a handful have a written business plan. Why? Maybe it’s a lack of time. Maybe it’s a lack of “know-how.” In either case, taking the time to plan your business is well worth the investment in time.

This series of articles will focus on business planning, marketing, and management. Where possible, I will mention software packages that I have found to improve productivity. I’ll also include sample questions and exercises to help you shape your business objectives. So, grab a notebook and a pencil and sit in a place where you won’t be disturbed for about 20 minutes. Let’s begin.

The basics: what business are you in?

Activity: In 20 seconds or less, state clearly what kind of computer consulting you do.

I don’t mean something like, “We do programming and system design.” That hardly gives insight into what you do best. I also don’t mean, “We develop software for database management, systems integration, network management, Windows applications, and other custom applications.” Small businesses that do everything under the sun lose credibility. If you wanted a deck built for your house, would you feel more comfortable hiring a general contractor who does all types of construction work or someone who just builds decks?

Here’s a sample effective statement: “We develop transaction processing software for insurance companies in the Washington, D.C.-metropolitan area.” By focusing your business, you can better define your target market and develop the best marketing strategies. People hire consultants as specialists, not generalists. Here’s another example: “We provide Novell network administration including on-call support for small businesses in the greater Los Angeles area.”

Now, memorize the statement you came up with. If you haven’t taken the time to write it down, stop reading! Don’t continue until you have written a concise description of the services you provide.

With this statement committed to memory, you will be able to tell people what you do clearly, without stumbling. Don’t put down that pencil yet. It’s time for some more questions.

Where do you want to be in 20 years? In 10 years? In 5 years? In 1 year? In 6 months?

Okay, I admit this can be a tough one. How many of us really think about where we want to be 20 years down the road? But if you don’t have any concrete plans, how can you monitor your progress? The only true way to measure your achievements and progress is to set goals, both business and personal.

I recall one study of a graduating high school class of 1954. Students were asked if they had set goals for themselves. They also were asked if these goals were written down. Only 3% had written goals. Twenty years later, the surviving class members participated in a follow-up study. The 3% who had set written goals were happier, more satisfied with their careers, had successful marriages, and made over 95% of the class’ money.

Activity: Write your long-term (20-, 10-, and 5-year) and short- term (1-year and 6-month) objectives.

While your long-term objectives are not cast in stone, they provide you with something to shoot for — the basis for developing your marketing strategy. Here are some sample objectives:

20-year
  • do $25M in annual sales with 200 employees
  • have offices in New York, Washington, Boston, Chicago, and Los Angeles
  • offer a wide range of custom software development services and products for financial industry firms
1-year
  • do $200,000 in sales
  • get 3 new clients
  • move from home office to office suites
  • hire 1 employee
  • develop 2 teaming/partnering relationships to bid on larger contracts

Notice that these examples are not lengthy paragraphs but, rather, simple lists. That’s all you need (unless you’re seeking venture capital). Also, notice that the examples are very concrete.

In the next article, I’ll continue with some of the basics that will help you develop marketing strategies suited specifically for your services.