4 Factors for Timing When To Launch Your Business

Whenever I’m out in the real world, I tend to shy away from talking about what I do. Now, don’t get me wrong, I love what I do. But it can be somewhat challenging to say, “I run a professional business planning firm,” and then hear about people’s excitement for their business idea.

Let me explain why.

In these scenarios, after a new acquaintance learns what I do, they launch into an animated pitch about their new guitar effects pedal company, their revolutionary creative staffing agency that will do things differently, or their idea for a mobile app that will be the next TikTok. I can’t take off my professional hat, so I always ask them a few key questions, suggest a few things that they should think about, and give them some words of encouragement before we part ways.

If that was the end of it, that would be great. But it never is.

Instead, because Portland is a small city, I’ll invariably run into them at a coffee shop or networking event weeks, months, or even years later. And, because I’m genuinely interested in entrepreneurs, I’ll ask them about our last conversation and whether they’ve made any progress.

To my dismay, 99% of the time they report, “no one would fund a project like this,” or “the economy is bad right now.”

But what they’re really saying is, “I don’t think it’s a good time.”

When I hear this from people who spoke to me so animatedly about their dreams just a short time ago, I feel their disappointment. But are these reasons valid? Or are they letting themselves — or someone else — get in the way of living the life and career they want?

So I wanted to take time in a blog post to objectively evaluate: what, if anything, can entrepreneurs do to get the timing right?

Factor #1: Personal Timing

Probably the most difficult assessment entrepreneurs have to make is about their personal lives. Entrepreneurship and business ownership aren’t 9-to-5 jobs. They’re a lifestyle commitment. Don’t get me wrong, there are times, and they occur more often than not, when the waters are calm and you and your team are making steady progress.

But there are other times when the shore is not in sight and the waves are threatening to overturn everything you’ve built. It’s during these times that you’ll need support.

When I served in the Marine Corps, I saw military families who proudly assumed the duties that come when a spouse or parent is serving the country they love. Taking over responsibilities during a deployment or when a training evolution began was part of what these dedicated spouses signed up for. However, I saw other military families implode because they either hadn’t had these important conversations or weren’t aware that the lifestyle would be so difficult.

Entrepreneurship is a similar commitment. Your family deserves to understand that they are part of this, that you are stepping into the unknown, and that you need their support. If there’s one piece of advice I could give above all else, it is that you have a long and honest conversation with the people you love most.

Factor #2: Plan-Based Timing

For many potential founders, the answer to the question of whether now is the right time is directly influenced by their financial situation. The issue, in my opinion — and this is supported by third-party research — is that too many entrepreneurs, particularly in the modern era where impatience and speed to market seem to dominate public discourse, do not devote enough time to real planning.

So first, let’s talk about what I mean by “real planning.”

Most people, and unfortunately I see this with some of our clients, want to build a business plan that proves out their initial assumptions; they’re seeking confirmation bias. However, the discipline of business planning is meant to be a logical, practical stress test. It’s not about what you want, but a holistic view of all the operable parts of what is.

Let’s look at an example, and to make a relatively simple point, I’m going to invent an example of a craft coffee shop seeking to open in a trendy neighborhood.

This company built out all their startup costs and expenses, getting quotes from their roaster on wholesale products, prices on the espresso machines, and signed an LOI on the lease.

So far, so good. But as they get into the market and competitive analysis they realize two critical things: First, they would have to capture 50 percent of coffee drinkers within a three-mile radius to be profitable and they have multiple competitors nearby.

This is an untenable situation … it’s going to be really hard to capture half of the market. But instead of looking at the empirical data, there are those who begin to rationalize to keep their vision intact.

“Well, there’s a 60-unit condo going in and our coffee and customer service is going to be so much better than the competition,” when in reality, the response should be: “Oof, I think we better look at a different neighborhood and maybe even look for a location that has a less-expensive lease.” Unfortunately, this type of planning often occurs far too late in the game and the entrepreneur has already emotionally, and sometimes legally, committed too much for them to change.

Second, and this is why solid early planning is so important, you’ll most likely need to have some skin in the game, and you won’t know how much until you determine what it will actually cost to get your company off the ground.

There are thousands of variables here, but let’s use the same example. Let’s say this coffee shop is going to cost $500,000 to launch ($300,000 in startup expenses and equipment and $200,000 in working capital to support operations until it can break-even nine months later).

If you’re pursuing an SBA loan, you’ll most likely need a 20 percent equity position (in the form of a cash down payment) and be able to collateralize the loan with personal assets (home, income-producing properties, other businesses, etc.). I don’t know about you, but a $100,000 cash position and attaching my family’s assets is a big commitment, and I sure as heck would invest time and money into making sure my plan is realistic before I took that type of risk.

Factor #3: Opportunity Timing

Okay, okay … so planning is important. But what if I’m not quite there yet? What if I’m still in the idea stage and I’m not ready to start talking to vendors and landlords and figuring out payroll?

This is perfectly reasonable, and pragmatic, and I applaud anyone who is seeking to understand their business proposition before committing to it. In these cases, I would seek to understand your concept via opportunity analysis.

I’ve written an entire article about how to do this properly!

Proper opportunity analysis is a focused effort at vetting your concept using various approaches, which I refer to as lenses, to get the information to substantiate your concept prior to beginning diligent planning.

If you’re planning to raise money from investors, opportunity analysis and the ability to answer the question “why is now the right time to invest in your company” within that context is critical and I would encourage you to spend extra time and research diligently completing each step.

Factor #4: Economic Timing

Every business is privy to external factors that are largely beyond its control. It would be foolish not to consider these factors when determining whether the time is right to launch.

Let’s say you’re starting a fleet of non-emergency medical response vehicles. With an aging U.S. population that is wanting to prolong independence and live in their own homes, there is great opportunity in providing rides to and from medical and other appointments. That sounds great! But if gas prices are surging with no end in sight, is now a great time to invest in a business that relies on it? Or perhaps, as a shrewd businessperson, you recognize that it would be timely to invest in electric non-emergency response vehicles (with a garage that provides solar power). Suddenly you’ve taken bad economic timing and made it an economic opportunity.

That said, timing the economic environment can be the scariest variable for many entrepreneurs, who fear committing their collateral to a business just to have the rug pulled out from under them once they get started. And it certainly matters to a business’ profitability prospects.

At the time of this writing (Quarter 4 of 2022), the current economic climate has implications for every type of business imaginable. At first glance, news of major tech companies such as Amazon, Facebook, Lyft, and Twitter announcing hiring freezes or even layoffs appears to be too much for a new tech startup to overcome. But what if you’re looking at it the wrong way? Unemployed talent will make it much easier to find the software developers you need, and being a smaller, agile tech startup in a tumultuous time allows you to adapt much more quickly than a bigger company can.

On the flip side, if you’re selling a final assembled good, supply chain issues and inflationary pressures can impact your bottom line. Meanwhile, as the Fed aggressively combats inflation by raising interest rates, the cost of debt is rising, putting a business loan out of reach for some entrepreneurs.

These are all important considerations, but here at Masterplans, we’ve survived and thrived during a few economic swings now, and we can say with all certainty that starting a business during a recessionary climate can be the best move some people ever make.

The annals of business history are filled with examples of people who were laid off from their corporate jobs during a recession, and who used that moment as an opportunity to take a risk and start that business of their dreams. During recessions, problems abound, and if you can figure out a solution for just one of these problems, you likely have a strong business concept. If you can meet a need, or just give people a spark of joy for an affordable price, this may be the very best opportunity you’ll ever have to start that business, whether it’s a supply chain disrupting tech concept or just a new hot sauce recipe you’ve been perfecting in your kitchen.

There Will Never Be A “Perfect Time”

The truth is that there will never be a perfect time to start a business. Simply put, as the saying goes, there’s always something. And some of those somethings, like not having saved enough money or not having the support of your family, are perfectly valid reasons to hold off on starting a new business.

Moreover, neither myself nor anyone else has a crystal ball to predict what tomorrow will hold.

All too often, I see people looking for reasons not to start a business rather than reasons why they should. There will always be obstacles, unforeseen events, changes outside of your control. However, that’s what makes entrepreneurs special.

Entrepreneurs have what it takes to turn adversity into opportunity, calamity into invention, lemons into the proverbial lemonade.

I’ve never regretted my decision to launch Masterplans, and being an entrepreneur is the source of my greatest pride (outside my amazing 16-year-old son, who has been by my side every step of the way).

Sure, you can keep waiting for the timing to be “perfect,” but keep in mind that there are other entrepreneurs with similar ideas who are making their right time right now.