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Before You Launch a Startup, Clean Out Your Garage

Learn why you should pursue a “soft” launch verses a full scale "brick-n-mortar" launch on Main Street.

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In my book Guerrillapreneur, I dedicate an entire chapter to convincing small business executives to pursue a “soft” launch verses a full scale “brick-n-mortar” launch on Main Street. Why? Cash is king and in an uncertain economic environment entrepreneurs should preserve as much cash as possible to extend the runway for their business launch.

In a recent post entitled “One Reason Why Your Business is Not Generating [Massive] Revenues”, Tara Gentile correctly surmises that “it is easier to earn your second $50,000 than it is to earn the first $50,000.”

Slingshot Capabilities

Before an entrepreneur or small business executive can earn the first $50,000, he/she must develop what I call a “Slingshot” capability (operations excellence) and establish a brand identity.

Few people remember the days when Wal-Mart was still a startup. The Arkansas-based company avoided markets dominated by goliaths like K-Mart and Sears. During that period, Wal-Mart invested billions (as much as K-Mart made in profits) on its Slingshot advantage, a world-class inventory management system.

Once perfected, Wal-Mart had a solution that improved inventory turns twice as much as the industry average and reduced its shipping and distribution costs 200 basis points below any major competitor.

If you are launching a business and your plans don’t include the development of a Slingshot capability, you aren’t ready to leave your garage.

Brand Identity vs.  Slingshot Capabilities

Brand identity is the recognized, differentiated outward expression of your business’ products or services.

My research suggests that it takes less capital intensive service-oriented businesses (i.e., barber shops) 3 years to develop a brand identity; whereas it takes a capital intensive product-oriented business up to five years.

If it takes 3-to-5 years to build a brand and approximately the same amount of time to perfect your Slingshot capability, what should an entrepreneur do in the interim?

Fortunately, I do have a framework that provides a little more guidance than my declaration to “launch your business from your garage.”

First, Clean Out Your Garage

In a classic 2×2 matrix format, I present two questions to business owners: (1) “Does the task differentiate your business (x-axis)”; and (2) “Is the task critical to the daily delivery of your product or service (y-axis)”.

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