As entrepreneurs, we take business trips on occasion – across town, across the country, or across the ocean. When we get ready for a trip, planning is always helpful. We double-check to make sure we have our cell phone, cell phone charger, briefcase and reservation information. We don’t want to start down the road and discover that the gas tank is empty, so we build in time for a fill-up if needed.
When starting or growing a business, a Business Plan helps us identify what we need to do, as well as the necessary order in which tasks should be done. When these Next Steps have been identified, we are well on our way to a Timeline.
A Timeline has two purposes.
First, identify the order in which all Next Steps should happen. Once we have made a list of Next Steps with a deadline for each, it is a relatively simple matter to put all of the dates into chronological order.
Look for periods of time on the resulting schedule where there is too much or too little to do. Adjust those now, during the planning stage. If we wait, it can become impossible to adjust later or, we may have to make tough choices which could have been avoided.
Second, identify the Critical Path. This is the “path” where you highlight the key steps that must happen in order to reach each end goal (e.g., store grand opening, book publication, product introduction).Collectively, these are known as the Critical Path, or the essential tasks that must be completed for progress to occur.
The following items are likely to be on the Critical Path for a start-up. Note they are numbered to show order. However, some have the same number, indicating both must be completed before moving on to the next task. Be sure to add a due date for each.
#1 – Determine a name that is legally available to you.
#1 – Settle on the type of legal entity (e.g., LLC, sole proprietorship, S-Corp).
#2 – Apply for a Federal Employment Identity Number (FEIN), unless you are going to be a sole proprietor. As a sole proprietor, you would use your Social Security Number (SSN) as legal identification for the business.
#3 – Open a bank account, using the name and FEIN (or SSN). Deposit working capital into the bank account.
#3 – Apply for a credit card that is dedicated to your business, unless you are going to use an existing card exclusively for business.
#4 – Apply for a business license, if applicable.
#5 – Begin making purchases using business capital, either by way of checks, cash or credit card linked to your business bank account.
Some tasks on the critical path may be surprising. For instance, I know someone was going to start a child care center in her home. She had a great idea, built on a solid business plan. Unfortunately, she went to great lengths to borrow money for a 7-passenger van, as required by the Federal government, without realizing that she had to get her landlord’s approval before the center could open. As of now, she has a van and is looking for a new rental home. In the meantime, she is not bringing in income to help pay her car loan.
There can be two approaches to identifying Critical Paths:
Approach A – The fastest path.
Approach B – The most efficient path in the long run.
To understand the difference between speed and efficiency, let’s look at the trip analogy again. If you need to drive from Albuquerque, NM, to Raleigh, NC, there are at least two possible paths:
Approach A – Speed: Get on Interstate 40 and drive until you get to Raleigh.
Approach B – Efficiency: If you have a business meeting in Dallas, it may be worth driving 75 miles out of your way and spending a couple of extra hours on the road en route to Raleigh. The Dallas meeting may not have been on the Critical Path originally, but can be added in order to save time and money in the long run.
The best path for your business will depend on how essential it is to reach the final destination quickly.
Color coding the Critical Path on your Timeline can be very helpful. We want those important dates to stand out clearly stand as we visually skim the list.
Find your Critical Path. You may be surprised! If so, let me know.
Until we meet again,
The Entrepreneur’s Friend
The Entrepreneur’s Friend® is a registered trademark of Wheaton Consulting Group LLC. Photo credits: All photos were taken by Cynthia Wheaton and owned by Wheaton Consulting Group LLC except as noted. Coffee cup art by Jim Wheaton. Author support: Fellow authors from The Wrinklings and Light of Carolina Christian Writers Group.