Depending upon your research and whom you believe is credible, you’ll find a variety of reasons and theories why small businesses startups succeed or fail. Reliable statistics indicate that roughly 80% of new ventures survive the first year and around 50% are still in business after five years. The issue is how to increase your odds considering there are no guarantees in business – regardless of how well you’ve planned.
Experts seem to agree that you absolutely must have the following to succeed:
- Money – Like good looks, you can never have enough. Entrepreneurs may have sufficient funds to launch a business, but fail to anticipate what they need to sustain momentum. It can take a year or two to merely break even; your revenue projections may be unrealistic. And there will be expenses you didn’t expect. It’s virtually impossible to run a startup on a shoestring, so have a couple months of cash in reserve. Opening additional lines of credit may make things worse. Remember, cash is king.
- Conviction – Going into business because you want to get rich isn’t a good enough reason. You better be passionate, driven and tireless. If you think you’ve worked hard in your life before, you ain’t seen nothing yet. Don’t forget – this is your baby. And like a new mommy, you’ll likely feel overwhelmed and exhausted taking care of it.
- Qualified leadership – Having a great idea doesn’t necessarily mean you can run a business. Being a skilled and experienced plumber doesn’t qualify you start your own plumbing company. You must either have extensive knowledge of your specialty and the market or bring in people who do. Hiring mistakes, particularly in the initial stages, will come back to haunt you. Identify areas in which you need help – then go get the right people.
- A sensible plan – Football coaches would never send their players onto the field without giving them plays to run. The same principle applies to business. You must invest the proper time constructing a logical and realistic business plan. Short- and long-term goals should be clearly defined.
- Target audience – OK, so you’re absolutely convinced that your product or service will be irresistible. But how do you plan to reach out to the consumer? Have you determined which market segment to target? Many experts recommend that you actually seek out and speak with potential customers. Find out what they want. If a competitor already is serving the market, you have to figure out how to differentiate yourself. Your product or service must be unique in some way.
It’s impossible to anticipate every rough patch you’ll encounter in launching a new business. Be diligent, conscientious and flexible. Proper preparation may not guarantee success, but lack of preparation will ensure failure.