Planning, plotting and scheming can feel like a lot of fun, but you need to be careful. As with anything in life, you’ll eventually need to make a decision and either give up on the idea or go for it.
Unfortunately, it can be challenging to know how long you should plan before starting a business. In some cases, it makes sense to wait and ensure you have all the pieces in the right place. But in other cases, you need to get going quickly because you don’t want to miss the opportunity.
So how long should you be planning a business before you dive in? Here’s what you need to know.
The Industry
First, you’ll want to consider the industry. Generally, businesses requiring physical premises or equipment require more planning. For example, it can take time to find and lease premises for a restaurant or order machinery for a business card printing business.
In these examples, there are also more sunk costs. You need to put up money first before you get a return, so you want to be sure you’re right.
On the other hand, software startups or online companies don’t require as much planning. You can try them, see if they work, and then continue or fold them without investing much of your own money.
The Complexity
You’ll also want to consider the complexity of the business. It can take years to plan how some models will work, while a lemonade stand might not take any time at all.
Generally, anything involving supply chains or manufacturing tends to be the most expensive. It’s hard to get it right because there are moving pieces, and things can go wrong.
Simper businesses include services you can provide yourself, or agencies where you leverage existing expertise. The approach you take depends considerably on the planning phase. The more you get into it, the more you’ll learn about the requirements.
The Legal Aspects
You will also need a longer run-in if your business is in a special legal category or regulated sector. Many companies need to notify authorities before they begin operating and ensure they fulfil various procedural or sectoral requirements.
Everyone should read an SS4 form filing guide before setting up a company. Finding out what you need to tell the IRS before you get started is essential and reduces your risks substantially.
The Resources
Finally, you’ll want to consider the resources you’ll need to get going. Again, the more capital you require, the longer it can take to get an enterprise off the ground.
You will also need to factor in things like procurement. It can take a while to get the things you need and arrange them in ways that benefit your business.
Most entrepreneurs aim for a minimum of 3 to 6 months of planning before going ahead and launching a business. However, leaving between 12 and 18 months is probably a better idea. This period gives you leeway to test prototypes, get funding, assemble a team, and understand the business model inside out.
