Bloomberg estimates that approximately 8 out of 10 small businesses fail within the first 18 months of existence. This might seem like a pretty high number, but it’s alarming if it’s even close to being in the same ballpark.
Despite all the prognostications of doom and gloom that follow entrepreneurship about the overwhelming number of small businesses that fail so quickly, you still bullishly refuse to lose, and plan on making it as a small business owner. Good for you! Don’t just run blindly into the fire though. Be equipped with the knowledge it’s going to take to get you out of that first year or so of stumbling around, facing threatening set backs, and defeating mighty challenges. Start by adhering to the following points that compose a sort of First Year Survival Guide for Small Businesses.
Especially in the age of technology, it’s tempting for small businesses to buy state-of-the-art everything when they start out in an attempt to differentiate themselves as a forward-thinking company not afraid to invest in their own success. Don’t mistake foolishness for smart investing though. Keep expenses low in the beginning. There’s no need to buy that classic Space Invaders video game for the company break room. For that matter, there might not be a need for an office at all. Many small businesses today can do just fine, depending on the industry, by everyone working remotely from the comfort of their own home. Bottom line is keep expenses as low as possible in the beginning until your customer base is established and the sales start rolling in.
Your new small business is like a new born baby, it needs to be fed early and often. The early profits you make (if you’re lucky enough to make them) should be reinvested right away as new fuel to ride out that rocky first year or more. Adhere to the principle of spending wisely here as well. In other words, don’t use those first profits to buy that Space Invaders game either, as tempting as it may be. Put it back into the company where it can provide some serious Return on Investment (ROI). A few years later if you’re still prosperous, then it will be time to buy some nice extras or even treat the people who helped get you there to a celebration dinner.
Have A Plan
Many entrepreneurs start out with a great idea that never comes to fruition because they fail to have a solidly crafted business plan in place before they get started. Don’t open your service doors or put that revolutionary product on the market until you have a sound business plan in place first. You could have the best service or product in the world, but it will go nowhere without an idea of how to market it and where you’re going to get the money from. Even if you already have financial resources at your disposal and don’t need investors, you should have a business plan in place.
Think Before You Act
Chance are that as a small business owner you are going to be working a lot of 12-16 hour days fairly regularly. It is positively vital to make productive use of that time. Don’t waste those precious hours on a wild goose chase for money or promotional campaigns that won’t work. Think carefully before committing yourself to something because your time, especially in that first year of business, is going to be very valuable. This is where you need to refer back to your business plan and check to make sure the proposal you are about to commit to is consistent with your goals and objectives. If it’s not, then decline the request for your time and move on to the next mission.
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