Is Starting a New Business/Company a Project in Itself?

Question

In terms of official definition, can we consider starting a new business or a new company a project and can it be managed according to project management principles?

Answer 1

A project is defined as work that has a defined start and defined finish and has produced something of value at the finish. So any effort where you have to produce some type of finished thing in an established and defined timeframe would most certainly be defined as a project and your work would benefit quite nicely from applying PM principles to it.

Answer 2

Welcome to PMSE!

can it be managed according to project management principles

You will certainly benefit from running it as a project. Here are some additional tips:

• Clearly define the end-point: As @david-espina said, you need a clear definition of when the new business has been started. For example, you may decide that when the first sales invoice has been raised in the name of the newly formed company you will consider the project completed. At that point you can declare the project completed and move into the operational phase of the company.
• Prepare a conservative plan: There may be some options that you are yet to decide on. For example, in the US you may have the option of forming an S corporation or an LLC. You want to consult with a CPA to make that determination. In the project plan put down the more time consuming and more expensive option.
• Your team will benefit from the very process of planning, even if there are many changes: In this context the quote from President Eisenhower, from the time he was Commander-in-Chief of the Allied Forces in Europe during the Second World War, is very relevant:

In preparing for battle I have always found that plans are useless, but planning is indispensable.

He means that plans may have to be thrown out the window based on actual battle-field conditions.

Answer 3

TL;DR

As a general rule, company formation isn't really complicated at the small-business or founding stage. Don't add unnecessary overhead to a process where more than 70% of small businesses fail.

Analysis and Recommendations

In terms of official definition, can we consider starting a new business or a new company a project and can it be managed according to project management principles?

Not really. Oh, you could stretch the definition a bit, but forming or creating a company isn't really a project per se. That said, there are certainly elements of company formation within the process that could be considered projects, by which I mean:

1. They have a defined objective.
2. They have a clear start and end point.
3. They can be managed to typical project management KPIs like scope, time, budget, and quality.
4. They require resources, which you have to allocate sensibly.

While these things aren't necessarily the formal definition of a project, they're useful guidelines in differentiating between ongoing processes and projects. There are certainly more formal definitions of what a project is, but this should get you started.

When it comes to business formation, some things you might consider as "projects" (even though again I gently suggest that they are essentially evergreen items or just parts of the process) could include:

• Putting together a business plan.
• Initial incorporation.
• Initial founder & officer recruiting.
• Initial advisory board or board of directors formation.
• Raising seed capital.
• Defining an initial product/service offering.
• Developing a marketing plan.

Each of these types of things is kind of a project in its own right, with clearly identifiable outcomes (e.g. a written business plan, a state-issued incorporation certificate, etc.) but one could also argue that these are simply parts of a process that don't really need tradition (or even agile) project management. Some may also simply be pieces of ongoing processes, like maintaining a marketing plan, performing ongoing recruitment, and managing board succession issues.

Unless you already have investors and significant seed capital (by which I mean millions, not pocket money), the need for formal project management at this stage is arguably overhead that doesn't buy you anything. A simple to-do list is a lot lighter-weight than implementing Scrum, Kanban, or Prince2 to kick of a small company. Any formal process has overhead, and overhead is usually something you want to avoid in the early stages of company formation.

Of course, your mileage may vary. You know best what you're trying to do. Just keep the issue of overhead in mind when you're considering what's best.

Answer 4

Not really. But it'll go through a life cycle similar to that of project management. Also each of these life cycle stages can be considered as individual projects.