The Small Business Administration has told the world that the number one failure of small businesses is in a lack of funding, and other sources claim that approximately 90% of all small business startups are destined to fail. There are horror stories everywhere you turn, and there can be an overwhelming fear of failure in your attitude towards pursuing your entrepreneurship goals. In spite of the seeming pessimism concerning small businesses, the U.S. Bureau of Labor reports that about 75% of small businesses survive the first year and about 50% make it five years. Although these odds aren’t great, you don’t have to become a statistic. There are several things you can do to set your business up for long-range success.
1. Create a Strong Business Plan
Many small business owners skip this very important part of creating their venture. While you will need a business plan if you going to be looking for financing from a bank loan or investor, you will want to draft a solid plan as a way to focus your vision for the company. Do you have a specific problem you are wanting to solve or a certain niche you are trying to explore? Determine realistic goals and timelines for a launch date, sales projections, and profitability. It doesn’t have to be lengthy, but it should be comprehensive enough to inform others about your business model.
2. Keep All Expenses Low
In the first months of your business start-up, you will have more expenses than you do income. There may be tax status filing fees, a business license, commercial insurance, purchasing inventory, marketing costs, and rental space. Some of these costs can’t be helped, but you can streamline the expenses that what is necessary for the initial start-up. Some things may be able to wait until after you have secured some clients or sales. If you require fast funding, a business credit card or line of credit might be one way to give yourself a cash cushion while you wait on income. However, don’t take financing options without considering the effect on your monthly budget and projected earnings. Keeping your expenses low is one way to make it possible to have the capital needed to make your financial obligations. Spend only on what you need, and look for ways to minimize the costs as much as possible.
3. Reinvest in the Business
If you are coming from a salary position with a company to pursue entrepreneurship, it is hard to give up the weekly paycheck and the stability of knowing where your funds are coming from. However, as you strive to let your business succeed, keep in mind the sacrifice you may need to make during the first year. The first money made should be put back into marketing programs for the company and more products. Owners are often the last people paid in the first months and up to the first year of new operations.
4. Don’t Confuse Productivity With Activity
As a new business owner, you are going to be busier than you ever imagined. But when you step back and look at everything you are doing, is it all helping the business move forward? There is a huge difference between hyperactivity and productivity. Burning the candle at both ends, so to speak, won’t move your company forward. It just depletes the supply of energy and resources even faster. Don’t accept all the accounts or requests that may come your way. You need to strategically invest your time and resources into accounts or partnerships that will be profitable long-term. Use free versions of business management applications to help streamline your accounting needs and communication tasks. Work smarter and not harder.
5. Develop a Customer-centric Style
Even though you want the best product or service on the market, your job is to help your customer over helping your image. If you are aware of the needs of your target market, you can adapt your sales pitch, your prices, your style, and your products in ways that will create the most beneficial and loyal connection between you and the consumer. If you build a service and delivery style that people both need and want, your sales will increase as a result.
6. Create Your Network
In small businesses, the more people you know, the better off you will be. Every face and connection becomes a source of inspiration, a word of advice, a potential customer, a vendor, or a sympathetic ear. Join your local Chamber of Commerce and attend meetings or luncheons that will put you in touch with other professionals. The more people you have at your fingertips, the greater the opportunities that may present themselves whenever you need a hand or a bit of wisdom.
These six areas can help give your business the foundation and tools it needs to succeed, in spite of the odds that might be stacked against it. Take your job as an entrepreneur very seriously, and put in the time and effort it will take to grow your fledgling venture to a thriving company.