Starting a business is no easy task and not for the faint at heart. But there are many areas you can focus on to help ensure your business stays afloat beyond its first year and continues to succeed for years after. According to the U.S. Bureau of Labor Statistics, more than 18% of new businesses fail during their first two years of operation, and more than 55% of all businesses don’t survive past the fifth year.
So, what can you do to not end up on the failed business list?
- Have a plan from the start
- Your business plan should be flexible and updated each year you are in business. At the end of the year, when making goals for the next, put everything in writing so that you have a road map to meet next year’s goals. Make sure that your plan also has measurable data tied to each goal. At the end of every year, we typically have our current business owner sit down and plan for the upcoming year, with specific dates for each goal.
- Embrace failures as learning experiences
- Things don’t always go as planned. Create backup plans just in case something doesn’t go as well as you thought it would. Failure creates innovation is the world of business. You will always learn more from failures than success. Remember, Walt Disney was fired from his newspaper job early in his career because he “Lacked imagination”!
- Not defining the correct target market
- We would all like to think that your product/service is for “everyone”. Or, on the day you open your new store, people will be lined up around the block anticipating the minute you open the doors for business. I hope but of these things happen but, in reality, its probably not going to work that way. Be specific in the target audience you are trying to reach. Know who your core buyers are by using a demographic breakdown of your current and future customers.
- Underestimating your capital requirements.
- It takes money to grow your business. Understanding that in the early stages will pay dividends in the long term of your business. Brick and mortar business relies heavily on location. Spend the extra money on the lease to ensure that you are in an optimal location with high amounts of traffic. Plan for expenses that you might have 1 year, 3 years and 5 years down the road. Being able to see what is ahead is the key to making the right lending decision. Once you get your business loan, its next to impossible to go back to the lender and get more money because you didn’t plan for something. 82% of all new small businesses fail from lack of long-term working capital.
- Underestimating the demands of being a business owner
- Its safe to say that once you become a business owner, your days of 9-5 or 40 hours a week are over. Most entrepreneurs work long hours with very little rest. For the first year, you can expect quite a bit of stress. Take care of yourself, learn to take time away from the grind of everyday business ownership. Make it a point to set time aside to do something you enjoy. Get on the golf course, go to Yoga class, do something that takes you away from the business, even for short windows of time.
