It’s often that desire for control over one’s life and the lure of a lucrative payday that prompts many to try and start their own firms. Unfortunately, the success rate suggests it’s a very difficult journey. Bloomberg says 8 out of 10 entrepreneurs who start businesses fail within the first eighteen months. What this months case suggests is, if you want to be successful at starting a business, treat it as a project.
In this story, we’ll follow a former teacher and business analyst, let’s call her Rebecca, who took a journey from the employee in a large organization to the owner and employer in her own firm. We’ll learn what steps and missteps she took, what she’d do differently the next time around and why she believes treating her entrepreneurial venture like a project saved her sanity and enabled a successful business.
Thanks to L.R. for the details on this story.
Rebecca had been a math and English teacher for ten years when she decided that she needed a new challenge. After searching and considering possibilities, she set her sights on becoming a business analyst. The role leveraged her analytical and linguistic skills and opened up opportunities in the business world.
Rebecca took some business analyst courses and soon had a BA job in a major financial services organization. She loved the work and achieved IIBA certification. She thrived on the stimulating and diverse challenges the job offered. The only downside was the three-hour daily commute, and the time it took away from being with her young family.
However, she persisted. She received a promotion to senior BA. She became more involved in planning and leading the projects she was involved with. She took some project management courses and obtained project management certification as well. Her expertise and success were recognized by her boss and many business executives. Consequently, she was in demand and was being called upon to run the largest and most complex projects. Unfortunately, the commute and the additional hours demanded from her senior role began to take its toll. She wanted more control over her time and her life.
About this time, a friend of Rebecca’s, a real estate agent, approached her about forming a company together. He knew Rebecca was frustrated with the amount of time she had to spend away from her family. He also saw an opportunity to tap into his real estate knowledge to acquire property for the business. He knew of Rebecca’s background as math and English teacher, and so he proposed a tutoring business using his building and her skills.
Rebecca considered his proposal. She mulled it over in the back of her mind but didn’t take it seriously. When her friend threatened to find someone else to partner with, she took the plunge.
Rebecca’s goal was threefold – to spend no more time than she was currently spending between her job and the commute, to have greater flexibility over the time she did spend and to earn equal to or greater income within two years of startup.
The first thing Rebecca did was develop a project charter. That’s what she did at work for new project initiatives. So she tried to answer the following questions relating to her new venture:
- Reasons for undertaking the project
- Mission and vision for the enterprise
- Objectives and constraints of the project
- Attributes of the desired future state
- Strengths, weaknesses, opportunities and threats assessment
- Expected future returns
- Measures of success
- Services offered
- The main stakeholders and their responsibilities, skills, and expertise
- In-scope and out-of-scope items
- Potential risks and remediation alternatives
- High-level budget and timeline
Filling out the charter was an illuminating experience. At work, the information needed to complete the charters for the projects she worked on was readily at hand and was, for the most part, provided by the projects’ sponsors and senior stakeholders. For her new venture, she and her partner were the sole sources of information, and they didn’t have all the insight they needed.
However, Rebecca persisted and finally managed to produce a draft she was reasonably happy with. She then reviewed the charter with her partner. That was an eye-opener. He didn’t understand the need for the charter. He knew real estate, not projects. He took exception to much of the content because it reflected Rebecca’s aspirations, not his expectations for the future enterprise and his plans for the building he was going to acquire. After a considerable amount of give and take, sometimes acrimonious, they delivered a document they were both able to live with.
One of the key issues out of the charter process was the provision of operating capital. After looking at numerous alternatives to reduce their up front and ongoing financial needs and securing the amounts they both agreed on, they decided to search for a partner who would be willing to contribute the necessary funds. The real estate agent managed to convince a friend of his, an accountant by trade, to become the third partner. Of course, that entailed another review of the charter and further revisions until all partners agreed.
It had taken four months from the time Rebecca committed to the venture to get a completed charter. She had allocated three weeks. Her initial timeline had allowed six months to go live, with a January start date. The revised charter now allowed three months with a go-live date in February. All of the partners were already occupied with their full-time jobs, and three-quarters of the remaining work fell on Rebecca’s shoulders. Not only was she not freeing up time to be with her family, her outside time commitments were expanding.
In an attempt to manage the demands of her full-time job along with the needs of the tutoring company, she took another look at divvying up responsibilities more equitably. Using her work breakdown structure, she assigned the work as shown below:
Surprisingly, the partners agreed to the plan. And so they began.
It was a challenging three months. Each activity depended to some degree on the results yielded by the other activities. The number and type of teachers required depended on the number and ages of students and subjects to be taught. The preparation of facilities also depended on the number of students and teachers and the number of classes being run concurrently. The availability of the teachers impacted the timing and duration of the classes. And so on.
Initially, the real estate agent was placing advertisements in local papers and social media and mentioning the new tutoring service to his real estate clients, but nobody was actually closing the sales. In fact, the ads referred prospects to Rebecca, not the real estate agent. The partners had assumed that they would offer instruction in English and math but found considerable demand for French and English as a second language instruction as well as a variety of technology subjects.
The partners checkpointed daily and revised their individual plans and approaches as needed based on progress to date. The daily meetings not only kept their plans and activities aligned and on track, but they also built a bond between the partners and reinforced their commitment to their shared goals.
On the second Monday of February, the tutoring company opened its doors to two students. By the end of June of that year, they were operating with over twenty students in five subjects four days a week including Sundays. The fall term continued on a successful upward trajectory.
They were being acknowledged in the community. Feedback from students and their parents was outstanding. Given the continued growth, the accountant was expecting to realize or exceed her return on investment targets at the end of year two. Likewise, the real estate agent was satisfied with the return he was getting on his building while it continued to appreciate in value. Rebecca was satisfied as well. She had resigned from her business analyst/project manager job and was looking forward to working less than twelve hours a day for the first time in a long time. Regarding her earnings, like her partners she was hopeful.
What a Great Leader Learned
To be successful, every change requires an investment of time, effort, and energy by the people affected. Fortunately, the three partners were ultimately willing to make that investment work to their advantage. Rebecca identified eight keys to their company’s successful launch and operation:
- Nail that vision – Rebecca and her partners shared a vision of the kind of business they were going to create – local, lean, focused and flexible. Certainly, that vision shifted and clarified as they worked together but early on they were unified in that focus. It just gained clarity as they progressed together. That clarity of vision is essential on any project.
- Fully engage with your partners – Initially, both the real estate agent and accountant were expecting Rebecca to do the lion’s share of the work. As she worked with them to agree on the charter and plan, she made it very clear what had to happen. Gradually they gained an understanding of the challenges and, as investors, they were convinced to take on a greater share of the workload. The venture would have failed without that participation. In many project situations, one can’t always pick their partners, the key stakeholders. They are key stakeholders because of their positions in the organizations affected by the planned change. That gives all the more reason to engage them early and often. It is, after all, their change.
- Balance roles and responsibilities – Rebecca’s first cut at roles and responsibilities left her with most of the work. Not only was that not workable, but it also was not equitable. The financial investment was the same for each partner as was the share of profits. Balancing investments – financial, knowledge, skills, opportunity, time – with rewards makes for an effective and committed team.
- Ensure a sound financial footing – The development of the charter forced the two initial partners to address their capital requirements. Bringing in the third partner with an appropriate injection of cash allowed them the cover the development expenses and initial operating shortfall. Dealing with the issue up front allowed them to focus on getting the business up and running, not worrying about how they were going to pay their bills. This lesson is equally applicable to traditional projects. Trying to deliver a champagne solution on a beer budget is a recipe for failure. Resolving the wish and the reality up front is an essential best practice
- Stay in touch with your customers – At the end of each tutoring session, in addition to test results, Rebecca would ask for feedback on the courses as well as suggestions for improvements and desired new subjects. Early on, the real estate agent started tracking every viable contact and query and the reason for their interest. Every quarter he would send out follow-ups to this group plus former and current students covering the current offerings and timings and include quotes from satisfied clients. They weren’t just marketing; they were having conversations. That’s a necessary ingredient for any kind of project.
- Be resilient – With only three months to get the venture open and operating, each partner had to be willing to change plans daily and to pitch in as needed. They were. In Rebecca’s words “Things will go wrong. Get used to it, get over it and deal with it. Fix the problems for the short term and find more lasting solutions for the long term.” Words to live by!
- Iterate – The business opened with two students. As the enrollment and the number of subjects increased, Rebecca tried different approaches to maximize the learning experience. Teachers that were willing to experiment with new and different approaches were retained and rewarded. Teachers who were not willing or able to seek better ways to increase value to the students were let go. Adapting, iterating and experimenting were keys to their success.
These seven lessons helped this project deliver a successful business on budget and in an accelerated time frame. I think the lessons are relevant to any kind of project. So, be a Great Leader. Put these points on your checklist of things to consider so you too can go from start-up to success with a smile on your face. Also remember, use Project Pre-Check’s three building blocks covering the key stakeholder group, the decision management process, and Decision Framework best practices right up front, so you don’t overlook these key success factors.
Thanks to everyone who has willingly shared their experiences for presentation in this blog. Everyone benefits. First-time contributors get a copy of one of my books. Readers get insights they can apply to their own unique circumstances. So, if you have a project experience, good, bad and everything in between, send me the details, and we’ll chat. I’ll write it up and, when you’re happy with the results, Project Times will post it so others can learn from your insights. Thanks