Investopedia has indicated that as of March 2021 only 80% of startups survived after one year. I propose that small business start-ups fail, not only because of poor business management, but also because of poor project management. Why should I say this? WORK comprises Operations and Projects. Operations sustain the business but projects bring about change. Starting a new business is a project and has to be done using project management methodologies.
PMBOK, the Project Management Body of Knowledge, defines a project as a temporary endeavour undertaken to create a unique product, service or result- starting a new business is one such endeavour.
In “Are You Starting a Project or a Business?-The Steep Path to Becoming a Successful Entrepreneur, David O defines a business as a venture with paying customers and clients, that adds value to people or organizations in a society. He argues that if it doesn’t have paying customers or clients, it is not a business.
You need to use project management knowledge, tools and techniques to ensure that you cover all that is needed to start the business and that at close off of the project, you have in place all that is required for the successful operations of the business.
You Need to Create a Project Management Plan for Your New Business
David Robins in his article in Benfire, entitled Five Project Management Mistakes Start-ups Make indicated that “Project planning should be as important to start-ups as any other business. Without proper project planning the start-up will more likely fail.” So why did he make such a statement.
To understand the importance of project planning to business start-up success, one has to understand what is project management. You may view the video below and my blog posts entitled Starting a Business the Need to Prepare a Project Management Plan and the one on the Business of Project Management.
Lets Dive a Bit Further into What Project Management is Aiming at Realizing
Traditionally project management has focused on the creation of the deliverables, especially the waterfall methodology. Whereas the project objective was always important, the main shift is now a more focused concentration on the outcomes/objectives of the project.
PMBOK 7 is shifting the focus more on value created by the project. It defines project management as
“the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.”
It further notes that
“Project management refers to guiding the project work to deliver the intended outcomes ………. Outcomes are an end result or consequence of a process or project. Outcomes can include outputs and artifacts, but have a broader intent by focusing on the benefits and value that the project was undertaken to deliver.”
For start-ups value is business value as determined with financial metrics. It means that when you enter the arena of project management, you are not only looking at the feasibility of the business, but its ability to meet your project objectives which are primarily to create profits, gain market share, etc.
Project Management’s focus is on the achievement of the objectives which focuses not only on the deliverable e.g. a new school, but the objective of the school- to provide education for the nation’s youth.
Key Benefits of the Business Plan
Benefits of the Project Management Plan
Sets out the goals, ensures strategic alignment and sets important milestones and metrics-performance indicators
Allows for focus on stakeholder requirements, project objectives and, strategic alignment, thus ensuring that the initiative drives the business forward, etc. Government is a stakeholder in every project and it is important to know the government agency(s) that have regulations etc. that the project has to compile with.
Allows for increased clarity of key aspects of the business e.g., marketing and operations strategy, capital investment, resources inclusive of skills/competences needed, location, asset acquisition, alliances, financial analysis, milestones for implementation, the management team, and the product or service of the business.
It takes into focus the ten (10) project management knowledge areas of project integration, scope, schedule, cost, communication, risk, quality, resources, procurement, stakeholders. It also uses the five stages of the project life cycle of initiation, planning, executing, monitoring and control and closing.
All are properly planned for. This allows for the proper management of all the knowledge areas as well as proper project planning, execution, monitoring and controlling and project closure.
Allows you to properly communicate your business plans to bankers, investors and other stakeholders and is the basis of ensuring confidence in your business
Focus on scope- reducing/eliminating scope creep, schedule management, quality management and risk management. Allows for the creation of a realistic schedule which is based on a scope and work breakdown structure and all the related activities and their sequencing. Also allows for the creation of a realistic budget. It also gives a clear road map of what you have to do to implement the project.
Allows for keeping the business on track as it links to the business management objectives, thus creating a road map to track results against planned metrics. Also informs for management of change
Reduces project costs by improving efficiency, mitigating risks, and optimizing resources. A key benefit is the focus on stakeholder requirements and in particular ensuring legal compliance re laws and compliance with quality standards and monitoring of these required standards as the project progresses.