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Dealing With Startup Change

Even a solid business plan can't stop the inevitable. How will you deal?
October 1, 2006
URL: http://www.entrepreneur.com/article/167848

Imagine you are building a sandwich restaurant, are knee-deep into construction, and suddenly you realize that you have to make a big change in your business plan in order to succeed.

That's exactly where husband-and-wife team Alexandra Degiorgio and Vito Polosa found themselves in mid-2004. Their original plans to open a sandwich bar in their New York City locale were abruptly stopped as continued market research revealed that their area's demographic wouldn't likely support such a restaurant. "[Locally], the median age was about 30, income was high, and the [residents] were highly educated," says Degiorgio. "There's a lot of competition to have something unique." Degiorgio, 39, and Polosa, 33, felt changing the plan midcourse was the right decision. Their solution was to create Aroma Kitchen & Winebar, a gourmet Italian restaurant, instead.

Watching for that wind of change is incredibly important to any startup. Entrepreneurs need to understand what's happening in the market at large, says David Zahn, president of StartUpBuilder.com, a subscription-based website that connects startups with business experts. Zahn offers two acronyms to help startups research their markets: SWOT, to examine your company's Strengths, Weaknesses, Opportunities and Threats; and PEST, to examine Political, Economic, Social and Technological issues in your market.

What are warning signs that your original business plan may not be sound? "Certainly, if your competition in the marketplace starts shuttering their doors, that's a good indication something is amiss," says Zahn. "Are your future competitors changing their direction?" What's happening in the market? Are we going through a low-carb phase? A wine craze? A luxury market boom? Those little insights can mean a world of difference to a startup.

If you discover a need to change something small or large about your business plan, don't panic. Give yourself more time to get started, like the Aroma founders, who moved the grand opening to April 2005 while they built their full kitchen and dining room.

Notes Zahn, "[Some] entrepreneurs throw the baby out with the bath water and say, 'We have to chuck the whole idea.' Not necessarily. Reflect on the original [idea] that caused you to have passion for this enterprise. Perhaps with some modification, the basic premise [can be] very similar."

Degiorgio and Polosa's revised plan kept the idea of a small, intimate eatery, but changing their specialty enabled them to serve their elite clientele and bring in annual sales of nearly $700,000.

Remember that your business plan is a living thing-if you need to make a change, be agile enough to do it. Run through all the ifs, backups, contingencies and disaster scenarios you can. Says Zahn, "Don't become too wedded to your initial plan. Running a business is going to demand flexibility."