Venturing into Small Business Project Management
The opportunity exists to create a consulting company that will support the efforts of small businesses, which are arising all over the country and the world. Specialists in all fields of business are popping up by the thousands to service the needs of growing industries. Most of these businesses get started on the proverbial ‘kitchen table’ and may grow slowly but steadily into specialty companies. During that process of growth, they are in great need of project management and financial management skills. Ahhh, the consultant, the project manager arrives…
Why Small Business?
Whenever anyone promotes a new thought or idea, they can expect to have people shrug, snicker, question, and show distaste. Although the profession of Project Management has been officially acknowledged for over 30 years, it is most often thought of in the venue of certain flagship industries. The construction/development industry is frequently associated with having professional project managers. More recently, the Information Technologies industry is a close second for high- skilled technical product/project development and ongoing maintenance.
Rarely would anyone discuss the opportunities that exist in other markets. Over time, a variety of specialty industries have come to fruition. In the past 32 years, Project Management Institute (PMI) has established 39 Special Interest Groups (SIGs). (PMI Today, 2003) These SIGs have expanded from a few interested parties to organisations numbering in the thousands who focus on improvement, expansion, education, and promotion of their specialty.
As we move into the new millennium, our approach to career development and job opportunities has changed and expanded. Through the end of the 1990's, we saw the encouragement of large and medium corporations to create home work environments. The crowded highways and long distances that the average employee was charged with on a daily basis often sparked these changes. As we moved into the new millennium, we saw the reduction of large corporate staffing, the disassembly of the dot coms, and radical changes in how organisations do business.
The home offices were already in place and the work-at-home parent was evolving. Small businesses were starting up all over the country. Small business, for the purpose of most analyses, is defined as firms with fewer than 500 employees. (Popkin, 2001; 2002) Globally, the impact of Internet expansion moved the local ‘mom and pop’ business to the international vision almost overnight. Quick and easy ordering, shipping options, tracking potential, and the desire to try something new grabbed the small business by the horns and morphed it into limitless opportunities. The statistics say the number of home based small businesses alone in the U S increased from nine (9) million in 1992 to over Ten – Twelve (10 – 12) million in 1998. (Pratt, 1999).
Most of these people were accustomed to a single job or work environment. Specialty skill sets keep many of them working most of their career in one direction. But, with great skills, new opportunities, and minimal financial investment required, they sat at the ‘kitchen table’ and a business was born.
For example, while basking in the specialty skills I had developed and refining and developing my career goals, I was approached by small business owners all the time with questions. Like, “What is project management?” “How do you make large projects, expensive projects, long projects look so easy?” As I expanded my personal development to education, training, and writing, more and more small business owners approached me.
Service industries represent the fastest growing sector of the national economy, and with the eminent growth of small businesses, these services have shown an average annual growth rate of 9.9 percent over the period from 1991 – 1995 (SBA Office of Advocacy, 2000) and that was long before the dot coms and Y2K expansion was realised. In fact, in Arizona alone, there were over 101,000 small businesses. (SBA Office of Advocacy, 2000) The gap was there. The Small Business owner was a specialist in what they did, but very rarely aware of what it took to run a business from end-to-end. They had enough money to get started for many reasons: The office is in their home; they had the skills, they may have the tools; they could communicate using inexpensive cell phones, fax machines, and email. But they needed help. They looked for other people in small business: Chamber of Commerce, Accountants, Lawyers, Financial Planners, but this did not satisfy their needs and often increased their expenses more than the return. They may start to put a process in place or make a list of all the things they needed to do, but the primary reason they were in business would be the focus of most of their time. Last on the list was managing the business and doing the paperwork.
When they thought to approach someone who was a Project Manager, some of their first thoughts were: “I don't have enough money to hire someone else.” “I don't really know what I need.” “Lots of other people have small businesses, what do they do?” If the opportunity arose, I would speak to the owners at a very high level of Project Management. Going right back to the basics of A Guide to the Project Management Body of Knowledge (PMBOK®), I would share the nine (9) bodies of knowledge, as illustrated in Exhibit 1. (PMBOK®, 2000)
Exhibit 1: Project Management Model
How to Evaluate Potential Small Businesses?
You may ask, “Where do I start to evaluate the potential small business?” Start with asking a few basic questions:
- What is the specialty of the business owner?
- Do they love what they do?
- Are they successful at what they do?
- Are they serious about building a business?
No need to waste your precious time if they are not serious or have the right skills to do what they propose.
Where to find potential small businesses? That is easier than you think. Start with your network of contacts. You probably already know several small business owners who are often commenting on how they cannot keep up with different parts of their business. They may even mention a particular trouble spot that can give you a segue into a conversation about the value of using project management as a solution. Don't forget: new businesses in the global ‘neighbourhood’, client referrals, and professional organisations.
Getting Started…
When you are ready to start a consulting business, spend some time with a professional who has done it before or take a few classes. There are benefits to both approaches. A class at your local community college or professional organisation can offer an organised and proven approach with all of the amenities of a good solid foundation for a successful business. Setting up some time with a professional consultant in your field or who has worked in several fields offers some real life experience.
Spend the time, do the market research, build a business plan, determine what means of communication is going to work for you and your potential clients. Not everyone responds to the same type of marketing technique. You may want several styles of communication.
In the course of your market research, you may find out some of the answers to questions that others will require in order to do business with you. Your conversation and discussions will lead to many questions. The more answers you have prepared, the better impression you will give of your level of expertise to the potential client.
A business plan is mandatory. You may choose to do this yourself or to work with a professional. As you walk through the process of creating a business plan, you will find yourself asking questions and requiring answers you had never thought of before. It will also help you focus on what it is you want to do and/or what service(s) you want to offer. Have at least three (3) people review your business plan and provide feedback. Make necessary changes until it feels complete. Review your business plan periodically to see that you are staying on track or to make modifications from your learnings.
Most professionals recommend a business card. A business card lends professionalism to your words and approach. When you introduce yourself and hand someone a business card, it makes it easy for someone to listen to what you have to say without being concerned about remembering your name and what you do or how to reach you.
In this day and age, with Internet access available to the majority of business owners; it may be questionable whether you need a paper brochure or a web site. Evaluate both scenarios to determine the usefulness of each. A paper brochure comes in handy when meeting people for the first time. It should outline the mission, contact information, and services you provide. It is an excellent way to introduce your business in a packet with a letter and/or biography of your primary owners. A web site can be significant investment and should be given considerable thought and research. Check out web sites that offer services similar to yours. Look at style, colour, font style, and ease of use, value, and content. When you have decided what you want, then begin contacting service providers. It is recommended that you obtain at least three (3) estimates before making a decision. Be sure, whichever your choice, that you have validated their long-term availability for service, as well as future updates.
When all is decided, be sure to include all information in every form of communication. A quick and easy way to lose a potential or current client is if they cannot find a way to communicate with you by phone, cell phone, fax, or email. Consistency and availability will pay off down the line.
The Interview
Plan the meeting with your potential client. You have made initial contact and should have gotten appropriate information from that discussion to do some due diligence and research about the product or service they are involved in. Thereby, you can develop some high level ideas about what you can offer.
Have an agenda for your meeting, even if you do not share it with the client. When appropriate, discuss the objective of the meeting. You will need to spend some time evaluating what the client is doing, how they are doing it, and what project management techniques you can apply. Do not take on more than necessary on the first round. Remember, a project is temporary, unique, and done for a purpose, with interrelated activities.(Mulcahy, 2001) The shorter and more impact the first project has, the more likely you will be asked to participate on a regular basis. There is an urgent concern here by the small business client that you will be too expensive. If the project warrants, discuss options with the client on the first visit. If not, set a follow up meeting.
Create Statement of Work
Create a Statement of Work, as illustrated in Exhibit 2, which outlines exactly what services will be performed and in what time frames. The Statement of Work (SOW) describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the items. (PMI 2000, p. 151); also a benefit to the potential buyer. The Statement of Work should be as clear, as complete, and as concise as possible. This document is usually the one that can be reviewed, agreed upon, and signed at a first sitting.
All client work warrants a contract between you and the client. A contract is a mutually binding agreement that obligates the seller to provide the specified product and obligates the buyer to pay for it. Contracts generally fall into one of three broad categories:
- Fixed price or lump sum contracts – this category of contract involves a fixed total price for a well-defined product.
- Cost reimbursable contracts – this category of contract involves payment (reimbursement) to the contractor for its actual costs.
- Unit price contracts – the contractor is paid a preset amount per unit of service (e.g. $75 per hour for professional services) and the total value of the contract is a function of the quantities needed to complete the work. (Civitello, 1997; PMI 2000, p. 151)
Keep this to a minimum and review it with legal counsel before approaching your client. Be prepared to have them request that their legal counsel review it before signature. Do no let this hinder your progress, this is the usual procedure.
Exhibit 2: Statement of Work
Create a Project Plan
Once you start identifying the activities and tasks involved in the project you can begin to build the project plan (McGuerty & Lester 1997), as shown in Exhibit 3. The Project Plan is the formal, approved document used to guide both project execution and project control. An Activity is an element of work performed during the course of a project. An Activity normally has an expected duration, an expected cost, and expected resource requirements. If appropriate, detail the activities into tasks, the lowest level of effort on a project. (PMI 2000, p. 197, 205) Don't worry about the sequence, time frames, or deliverables at first. Gather all the pieces of the puzzle first. Later you can put time lines and deliverables to them. Spend valuable time with the client to identify exactly what they expect and what you can deliver. Each task should be approximately 5 – 10 hours, no longer. This is a specific modification from the acceptable standard of a task being 20 – 40 hours long. This is the result of working with a small business and most likely, a small project to be done over a shorter period of time.
The deliverables may need sample information from the client. The deliverable is the products, services, processes, or plans that are created as a result of doing a project. The final deliverable is delivered to the customers of the project. An interim deliverable is produced during the process of creating the final deliverable. (Martin-Tate, 1998) Be sure to explain any exceptions or areas of expertise that you do not have and may need to research. Sometimes the expectation is that you are the subject matter expert in the project. That may be true, but more often it is not so and you will have to do some research or get others involve. If you are going to have to enlist the support of other experts, remember to include the cost of such.
Once you have completed the project plan, review it with the client at a high level. Get buy-in of what it is you are going to do, how long it will take, and what will be delivered. Not all deliverables are tangible. Be clear as to what they will actually see and what else needs to be done.
Exhibit 3: Development Project Plan
Let's get this show on the road…
Setting the start date should be obvious, but there may be dependencies that need to be discussed and addressed. Once you start, your client is going to begin to expect immediate results. Remember to set expectations with potential milestones throughout the project plan. Milestones are ultimately chosen based on the client's perceptions of the most important accomplishments of the project. (Martin – Tate, 1998)
Assure the start date is realistic, that all contract and statement of work discussions and agreements have been signed, and that a detailed review of the project plan is completed. The end date should be defined within the project plan, plus any contingencies. Be aware that contingency planning with a Small Business is going to have much greater impact than you may have experienced in large corporations or organisations. The total of the project plus the contingency may put you out of the reach for a Small Business. Also, that potential for flexibility is going to be greater allowing that the Small Business does not have the maturity for the processes you will be using.
At this point, it appears that a majority of the time has been spent on obtaining the client, introducing the client to a new concept, Project Management, enlisting their support through contract and statement of work negotiations and putting together the project plan. That is true. In recent years, it has been acknowledge that 35 to 55 percent of total project hours is spent on planning which varies in intensity over the life of the project. (Kerzner, 1998) Now:
- Work the plan
- Complete the assignments
- Review processes
- Make changes
- Communicate progress
At the completion of the project, do not forget to do a review of the results. Assure 100 per cent satisfaction by your client. Discuss future opportunities. Obtain recommendations and referrals.
Ongoing Support
If you determine that ongoing support is going to be required, have that discussion as soon as possible. Any ongoing support should be defined clearly in the statement of work. The cost of ongoing support may be priced differently. For example, if the project work is priced on an hourly rate, the ongoing support may be priced on a fixed rate. Do what works and treat each project and assignment individually.