5 Tips for Turning a Business Unit into a Startup

It is a common fear that transforming IT into a business unit will result in anarchy because it is assumed that IT cannot serve internal and external customers all at once. It may seem like a shot in the dark, but making IT into a business unit can be a profitable maneuver for a company. In an article for TechRepublic, Mary Shacklett elaborates on five ways to turn a business unit into a successful startup:

  1. Validate a viable business by performing upfront due diligence.
  2. Make staffing decisions.
  3. Determine the legal framework.
  4. Sell the idea.
  5. Focus on service and innovation.

There needs to be an extremely persuasive reason for investing in the transformation of an internal business unit into an external business. Financially speaking, this move should at the very least break even, and there should be minimal risks to the business.

The person tasked with leading the startup needs to have both business savvy and technical knowledge of the services. This person may be difficult to find, but without a strong leader the startup will almost certainly fail. Additionally, the internal staff assigned to the startup should only be assigned to the startup, and they should be very service-oriented.

The last thing you want is for the startup to get caught in a legal vortex. Is this startup a branch of the parent company, or an entirely new entity? How will the startup be represented in the board room? These are important questions to ask and establish early on.

Startups are highly risky endeavors, and because of this, selling the idea to leadership can be an arduous task. Initially, approach the meetings with executives as hypothetical brainstorming sessions, and then move into the serious discussions of the finite details of the startup. Lastly, if this startup is an IT project, customers will approach it looking for an innovative, technical solution at a fair price. IT will need to focus more on their customer service to keep their customer happy and returning, something that is especially important to the birth of a new business.

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