You probably don’t need to be told how easy it is for a start-up business to fail. According to Forbes Magazine, nearly 80 percent of small businesses don’t make it through the first three years. If your business is based online? That number rises to 95 percent.
Most people might get chased away by such staggering statistics, but really there’s a simple explanation for them. Starting a business is easier now than it ever was before because of the internet and social media, and you have the potential for reaching customers around the world with a single click. This means quite a few people are looking to get rich quick instead of taking the time to really build a foundation for a business that lasts.
Whether you’re building a brand online or in person, or with a healthy combination of the two, there are a few basic steps you need to take to give your business a solid place to land.
1. Learn to Compartmentalize
When you first initiate your business, you might be the only one on the payroll, but you still need to separate the different aspects of what it takes to run a company.
According to AWeber Communications, 93 percent of small businesses have fewer than 5 employees, which means owning a start-up is a juggling act. Advertising, customer service, and technology should be clearly defined functions that are all essential to selling your product.
You should be certain you’re not devoting too much of your day
to any one task and neglecting the others.
When you grow to the point where you want to hire employees, you’ll know the positions that need to be filled. Compartmentalizing is also a psychological tool to solve problems. Not only must you learn to separate your business challenges from your personal challenges, isolating different areas helps you prioritize issues. And a new business will have a lot of issues at the same time, especially during the first year.
2. Have a Realistic Business Strategy
Research shows that simply having a business plan actually doubles your chance of success. Solid business plans increase your likelihood of reaching goals like securing a loan, finding investment capital, or hiring workers.
That doesn’t mean you need to think ambitiously about growing your business for the sake of growth. A real business plan has several important elements to it:
- Start with an executive summary
- Followed by company description
- List your products and services
- Do a market analysis
- Create a marketing strategy
- Write a management summary
- Complete a financial analysis
You can probably guess that the market analysis and market strategy have to do with the industry you’re entering and how your business fits into it, including pricing. The financial analysis shows how your business is being financed right now and what kind of financing will be needed in the future.
No matter how many stories in the media you read about businesses that succeeded by winging it, the evidence shows you are far better off with knowing this information beforehand.
3. Manage Costs Effectively
According to the Houston Chronicle, small businesses can spend upwards of $5,000 a year on insurance alone. Of course, this amount varies wildly depending on the type of business you run, the location, and how many employees you end up hiring.
The cost of insurance combined with the cost of marketing, product shipping, maintaining company vehicles, or renting office space can overwhelm your finances very quickly.
Luckily, the digital age makes advertising and marketing cheap and readily available. It costs very little to nothing at all to create a website and social media presence, where customers can click for more information.
As your company grows beyond the internet, you might want to enlist the services of an accountant. It could seem like a big investment now, but an accountant will help you get the most from your small business tax write-offs at the end of the year, which could mean the difference between sinking and swimming. You should also look into revenue management systems which can bring transparency to your business operating costs and give you an idea of how to better distribute your resources.
Owning a business often seems glamorous at first, but if you’re serious about making a mark in the entrepreneurial world you have to take your business foundation seriously, too. The nuts and bolts are what’s really important, and if you give yourself a solid place to start, the opportunities are endless. And most importantly, you can continue taking them for a long time to come.
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