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.
Author Amy Nielson is a blogger who writes articles for Briggs & Butler, a medical insurance provider that can offer policies for families. You can follow her on Twitter @NielsonAmy.
Amy
Latest posts by Amy (see all)
- Five Tips for Establishing a Strong Business From Your Great Idea - August 7, 2013
- Online and Offline Marketing: Rounding Out Your Strategy - June 30, 2013
- Traditional Advertising Strategies that Still Hold True in the Digital Age - June 28, 2013
Thanks for the informative post and indispensable tips for business start ups and entrepreneurs too. We agree with your points and think too many people start a business without a clearly defined plan and structure for tracking progress.
Choosing the right business strategy is probably the most difficult and htimportant step
When you want to start a business you first should know that there is 50% chance your business will fail. You should also know that you have to take a risk in managing your business
Amazing article man. You’ve highlighted some of the best tips to start and build a better business. Thanks a lot for this.
Starting a business is not so easy but these things are helpful which you mentioned because these are practical
Thanks for sharing great information. i Agree with managing costs. It is very important part in the start of business.
Rahul would love you to read ..Extend Your Wifi Modem Router Range For A Long Period Of Time
Starting a business is not easy because if not properly planned, it will collapse. Thanks for this great post.
Owning a business…the American dream. Yes it is true that so many business fail quickly after start up yet the ones that have succeeded would never have do so if they were never started. If you have an opportunity and are willing to work hard and have a good business plan, go for it.
Scott Drescher would love you to read ..Proper supervision is the key to reducing child drownings
Great tips. Thanks for sharing with us
Hi Amy,
As correctly mentioned in the blog post, first of all you need to compartmentalize and manage the cost effectively which is the foremost important and i would like to add one more thing if you are not able to manage the business if you are new comer then hire some good person having management knowledge whom you could trust and handle your business effectively but never express that you don’t know any thing, other wise things will go in reverse.
Regards
Siddhartha Sinha
Siddhartha Sinha would love you to read ..Top 5 Google Adsense Alternatives 2013
Even that we have very good ideas, we still can’t do anything without a big money 🙁
hanatashi would love you to read ..Hair eRazor and Fresh Balls: A Match Made in Heaven
Great Tips for Newbie businessman. Thanks alot
Foundation is a must and that too a strong one. Great share! Without a good and powerful foundation big, big companies topple off so much care should be taken while building a foundation.
To listen success stories of your business, first of all make business plan and financial activities rich. For online business do too much struggle SEO to enlist your site in organic searches
Foundation is a must for business, big businesses without good foundation go down.
I actually thought that an online business would have a smaller failure rate!! Anyhow, I think compartmentalization is actually one of the most important aspects when starting a business venture.
Frank Cern would love you to read ..Next Google Pagerank Update
When I was working with my wife on her photo business, I definitely found myself devoting more time to marketing and less to activities like order fulfilment. Sounds ridiculous now, but at the time it seemed reasonable. Core business tasks have to come first.
I think a lot of people are confused and overwhelmed when they think of starting their own business. This is a great strategy and calms me when I think of the process. Thanks for sharing!