How to organize your startup plan and include learning actions -

A key question for all entrepreneurs is how to avoid making wrong decisions and investments.

6.4.2023

Heikki Immonen, Karelia University of Applied Sciences

An effective startup plan contains goals, decisions & investments, actions and a timeline

Organizing your startup plan is all about carefully thinking which decisions and investments you should make first, and which should be postponed to the future. For each decision and action, you should ask: what do I need to know to make this decision?

As we discussed in the previous article, a good startup plan contains the following key elements.

It defines (roughly) the end goal, meaning the type of business you are planning to launch.
It contains all the important decisions and investments you are likely needing to make in order to reach your goal.
Decisions and investments are sorted out based on their costliness, level of uncertainty, and reversibility.
The defined learning actions for all important decisions and investments that prepare you to make these decisions and investments correctly.
Every step has been scheduled in a realistic manner.
The plan is reviewed at weekly meetings, and adjusted if needed on a monthly basis.

In this article, the focus is on the last four elements of a good startup plan.

Sort out the decisions & investments based on their costliness, level of risk and uncertainty, and reversibility

Transforming an idea into a business requires many decisions and investments. The question is: which decisions and investments you should make first, and which you can postpone later to the future?

The simple answer is: make those decisions and investments first that don’t cost you much, have low uncertainty, and are reversible. The decisions and investments you make early should aid you in avoiding making wrong, costly decisions and investments later in the process.

The cost of a decision or an investment

The cost of a decision or an investment means that how much time, money and other resources are required and consumed as a result.

In the beginning, when there is more uncertainty related to your idea, it is good that the decisions or investments you make in the beginning don’t cost too much, in case they end up being wrong ones. They are then losses you could afford.

Examples of low-cost vs. high-cost decisions and investments:

Starting up a popup café requires much less resources than a fully established café with a permanent location.
Registering a web domain is not as costly as developing a brand identity with an advertising agency.

The uncertainty of a decision or an investment

One way to define the level of uncertainty of a decision or an investment, or a business idea in general, is to define that how much the idea is likely to be having needs of change or how much the decision or the investment need to be modified before the state of a successful business is reached. If you are missing a lot of the information you need to have in order to make the decision, then that decision has a high level of uncertainty.

In other words, when the uncertainty is high, don’t make important and costly decisions or investments yet, because these decisions or investments are more likely to be wrong. That’s why you should prioritize less uncertain decisions in the beginning of the journey.

For example:

Choosing the legal framework for the company (doesn’t depend on many factors, a limited company is the right choice in most cases) vs. finalizing the pricing of the products printed on the physical marketing materials (pricing depends on many factors including the target market, cost structure etc.)

Also, remember to consider whether or not a decision or an investment can produce unexpected negative effects.

If I release the product too early, can the competitors copy it too quickly?

Irreversibility of the decision

Don’t make important irreversible decisions and investment until you really must. On the other hand, if the decision or the investment is reversible so that you can adapt it to changing situations and to the new information you gain, you have much less risk in your decisions.

This means that easily adaptable investments are important in the early stages. For every investment or decision, you should ask: How can I make this decision more reversible or adaptable? Make the decisions and investments early that are reversible and/or easily adaptable:

For example:

Selecting a vaguer company name (Purple Solutions Ltd) over a very specific name (CRM SaaS Systems Ltd). The former name gives you freedom to modify your products and services, while the latter can be a hinderance if you need to pivot a lot.
Renting a location instead of buying a location. A lease can be terminated, while it might be very hard to find a new buyer for the location you have bought.

For each decision & investment, assign fast and cheap learning actions that you should take before making the decisions or investments

Now comes the important part. Ask:

What do I need to know and how will I get that information in order to make a decision or an investment?

When you ask this question, you can start thinking about the ways to obtain the information you need fast and cheap. Here are some common “knowledge capture” or learning actions entrepreneurs may take early in their journey:

browse through the internet or ask AI for examples of competitors or similar products
find out how much the components of the product cost and make a profitability analysis
talk with experts and more experienced people, ask what kind of problems do they see
observe the behavior of target customers using the existing products
interview potential customers
build a prototype or a demo
test your product
do a test marketing campaign

As the list above shows, learning actions are actions that prepare you to make better, smarter and more affordable decisions and investments. Learning actions give you to information you need to accomplish a planned more costly action successfully.

A more comprehensive view of learning actions is to see them as ongoing processes that continuously provide you with the information you need to manage your business.

If possible, combine several knowledge capture actions into more multi-dimensional ones so that the learning is maximized

Multidimensional learning actions in business development are the ones where you do holistic testing of your business idea in realistic situations. Examples of multidimensional knowledge capture actions:

A pop-up café: it gives you information for evaluating the product-market fit, and the feasibility and profitability of your business idea at the same time.
Conducting a short internship in a similar company in a different city.

Put the decisions and actions on a realistic time-line

After you have a rough list of decisions and the related actions planned, you can start putting them on a time-line. This time-line can divided into quartiles, months or weeks. It can be simply a list or a more sophisticated plan like a GANTT chart.

Here is an example of a simple time-line. The decisions and investments are shown in red color, while the learning actions are shown in black:

APRIL
- Test the recipes with friends and family, adjust if needed
- Calculate variable costs for each food, adjust the recipe if needed
MAY
- Prepare a simple social media promotion campaign
- Register the web domain you plan to use in your pop-up restaurant and you think will be the name of the actual restaurant
- Buy disposable tableware
JUNE
- Launch a small-scale social media campaign
- Setup and operate a popup restaurant for two weeks
- Interview customers, observe their behavior

Include a startup plan review in your weekly meeting routines, and adjust it when needed

Finally, you need to review the plan at the weekly meetings. It helps you to focus on the right actions. Many creative people have a tendency to let their focus dissolve, which prevents them from actually moving forward. A plan helps you to focus your energies and creativity.

On the other hand, the plan needs to be flexible. Perhaps once a month you should have a deeper review of the plan and think whether you need to adjust the plan itself or not.

An example of a weekly meeting agenda for a startup team:

Review of the startup plan and overall progress
Review of tasks completed since the last meeting
Discussing any unexpected problems or opportunities
By reviewing the startup plan, assign new tasks for each member to be done before the next meeting

About this article

The writing of this article was supported by the INnoVations of REgional Sustainability: European UniversiTy Alliance project. https://www.invest-alliance.eu/ . This project is funded by the Erasmus+ Program.

The content of this article represents the views of the author only and is his sole responsibility. The European Commission and the Agency do not accept any responsibility for use that may be made of the information it contains.