Starting a Business? Plan Carefully and Adjust Quickly
Why it is so important to be both strategic and flexible when running a new business
Editor’s note: In this series, Next Avenue follows Patricia Wynn as she embarks on becoming an entrepreneur with her North Carolina lifestyle assistant business. Future installments will note her progress, with advice for her and for other midlife entrepreneurs.
Let's face it. No matter how well thought out an entrepreneur's business plan is, during the first 12 to 24 months of a new business, things will happen that are different from what was expected.
Startup owners must be able to pivot or tweak their businesses in order to survive changes in the market or their customer base. Most importantly, entrepreneurs of small- to medium-sized startups must be strategic as they modify their plans, so they can use their limited resources to their best advantage.
"Entrepreneurs don't want to spend time on something if it doesn't bring in business."
When it comes to services that a company offers clients, Kimberly A. Eddleston, the Schulze Distinguished Professor of Entrepreneurship at Northeastern University's D'Amore-McKim School of Business in Boston, says, "If something doesn't make you money, but leads to what is making you money, then you keep it."
Eddleston, who is also a senior editor of EIX, the Entrepreneur and Innovation Exchange, which is a funder of Next Avenue, says "Entrepreneurs don't want to spend time on something if it doesn't bring in business. They have to make strategic decisions on what will bring people in the door."
Adjusting to a Different Demographic
Those strategic decisions cover not only what services a business might offer, but who it sees as its primary clientele. When Patricia Wynn, owner of Patricia Services, LLC, in Hillsborough, North Carolina, started her lifestyle-assistant business in April 2021, she thought her customer base would be comprised mostly of clients who were 65+.
In the past year, she has seen her customer base evolve to include Gen Xers and even a busy mom and PhD candidate with young children who needed help cooking for her family while she worked on her dissertation.
"Originally on my website, it seemed like I was aimed more toward the elderly," Wynn says. "Now I want to reach whoever needs assistance with their daily activities," no matter what age they are.
Broadening her target market has been fruitful, but not without challenges. One difficulty has been adding one or two staff members — even on a part-time basis. "The hiring part has been more difficult than I expected," Wynn says. "There's a labor shortage nationwide. People are all doing their own thing and don't want to work for others, even part-time."
"I also have to make sure I have enough hours with clients to offer someone to work with me," she adds.
Being flexible also means growing a startup gradually, notes David Deeds, Schulze Professor of Entrepreneurship at the University of St. Thomas Opus College of Business in Minneapolis and EIX editor-in-chief.
Tips for Growing Slowly
"When starting a business, buy only what you need," he advises. "If possible, when it comes to equipment and other items, buy something that is used or second-hand and less expensive. Don't get an office before you need one. This is the difference between slowly building a business and being able to succeed and having a big ego and doing too much too soon and failing."
Making strategic decisions has been key for Wynn as she has maneuvered her startup business around the pandemic, inflation and higher gas prices over the past year.
"I'm taking it one day at a time," she says. "You've got to do what you need to do to feed yourself and pay bills. If you see something is not working, you have to let it go. You might have to go about it a different way."
Respond to New Circumstances
As things change, entrepreneurs must not be afraid to update their business plans. Rather than updating once a year, many updates may occur on a monthly, weekly or even daily basis. Startups don't function in a vacuum, they function in the real world where constant changes occur.
According to a recent article on Entrepreneur.com, leaders of successful businesses need to spend time developing effective strategic plans for where they want the business to go and decide how to best allocate their resources to get there.
While many factors go into developing a differentiated strategy for a new business, one of the most important, according to the article, is deciding on a target market and finding the best way to reach it effectively.
To that end, now that she has been in business for more than a year, Wynn is reconsidering how she advertises her company, estimates pricing and considers expanding so she would be able to add a staff member or two.
Changes Afoot at Patricia Services
"This month, I've come to the conclusion that I'm going to make some changes to what I'm doing," Wynn says. "In terms of reaching new customers, since the Care.com website only generates a few referrals, I'm going to print some flyers by late August or early September and distribute them in parts of Hillsborough and Chapel Hill where I haven't advertised before, because some people still don't shop for services online."
Moving forward, Wynn says she will change her pricing structure. For new customers, rather than pricing by the hour for cleaning, cooking or running errands, she will "assess what tasks I'm being asked to do and the size of the home, and factor in the gas I need to drive there, before I give a price estimate for each specific house."
"I've worked hard to develop good relationships with my clients over the past year, and I need to maintain that."
She has found that local cleaning companies charge more than she does for the same work, and for some clients there is also a caregiving element, whether she is supervising youngsters or assisting an older client.
"I'm making the pricing change to make it more equitable for the time and energy I'm spending," says Wynn, who will retain an hourly rate for existing clients.
Thinking Two Moves Ahead
She also wants to add commercial clients like banks, office buildings and car dealerships to her roster of customers. That would increase her cash flow and enable her to hire people besides her brother, who periodically cleans properties for a client with Airbnb rentals.
The challenge, says Wynn, has been blocking out the time to sit down to figure out the next steps for her business while maintaining a 40 to 45-hour work week, which alternates between five and six days.
"It's tough when you're by yourself," she says. "One of my clients . . . has relocated to Boston, so now I have Monday and Wednesday evenings free to look on the computer and research what I need to do to move forward, make more profit and add clients and staff. One way to attract more staff is to fill out job listings through the local labor department. I used to post job listings there when I was a manager at McDonald's and Wendy's."
Carefully Vetting Jobseekers
Wynn says she may also post a job listing for her business on Facebook, clearly stating that background checks will be done on anyone who applies.
When she replaces the client who moved to Massachusetts, Wynn will hire someone to work with her. The application process will include a practical component.
"Part of the interview will be to shadow me for a few hours, so they can see what I do for a client," Wynn says. "If they can handle the job, and if the existing client likes them, then the following week I would send them alone, while I service a different client."
Wynn says adding even one staff member requires that she make sure her existing clients can develop a good rapport with someone other than her. "I've worked hard to develop good relationships with my clients over the past year, and I need to maintain that," she says.