If you’re a budding entrepreneur, you’re probably hearing nothing but one horror story after the next of new businesses failing. The reality isn’t as grim as many make it out to be: the U.S. Bureau of Labor tells us 75 percent of new businesses make it through the first year.
The survival rate is pretty bright, but don’t get too comfortable. Chance should not dictate your fate. Here are five things you need to know to set your business up for success.
Don’t Wing Your Business Plan
Take the time to write a formal business plan; you need to document your strategy to sharpen your visions and identify any potential pitfalls for the new business. The document can be brief. All you really need is a handful of pages that detail issues such as your funding plans, costs, competitors, your target customers, the problem in your market you’re trying to address, and any milestone dates.
Search online for templates; some will encourage you to be quite thorough while others support brevity.
Spend With Care
The number one reason new business fail is because their funding runs dry. It’s vital to keep your spending as low as you can while you wait to churn a profit. This is especially crucial if you have a long sales cycle in your industry and need to develop a product before you sell it.
You can cut back on spending by using freelancers and contractors in lieu of hiring full-time staff. You can also do without an office; set up a home business within your budget. Make sure to take advantage of affordable digital channels, like Facebook, for your marketing efforts instead of spending cash on print or radio ads. Turn to inexperienced interns and train them well versus hiring expensive professionals with loads of experience. Review your monthly expenses to identify any spending that is unnecessary. Don’t be afraid to explore working capital loans if you need cash on hand for unforeseen operating expenses.
Seek Professional Advice/Help When Needed
When it comes to financial advice and professional HR, go ahead and spend your money. A skilled accountant has the ability to help you attain sizeable tax efficiencies and can identify ways for you to save cash. He or she will know the trends within your industry. HR advice will often help you avoid costly disputes with your staff and prevent you from hiring the wrong person. Professional photos of your products will give you beautiful product photos for online stores, which will help you sell more. Good help and advice is worth paying for.
Do Something Well Before You Expand
While you may have the ambition to build an empire that straddles various lines of business, don’t get too far ahead of yourself. Start by focusing on a single product line. When you begin in a territory you know well, you can take that time to learn and build a steady stream of revenue before you scale out to national markets. It’s not smart to offer too many services or cover too many regions in your early months. You don’t want to spread your resources too thin.
Don’t Be Afraid to Automate
Business owners have so much on their plates; instead of dedicating lots of your time fiddling with tasks, choose to automate. So much of your business can be ran with automated services, from invoicing to accounting to marketing to payroll to customer relationship management. When you automate tasks, you can save hours of time and avoid human errors. You’ll also reap the benefits of easier compliance with tax laws and gain access to information that will help you make the best business decisions.
In order to help your business succeed, resolve to commit to doing all the things you can to ensure its survival. The first year is often a difficult one, but with careful preparation and by acting decisively, you can secure the viability of your small business.