The percentage of businesses that fail during their first year is 25%, with 31% failing after two years. There are things you can do as a new entrepreneur to get past the first couple critical years and achieve a successful business. Some of the most successful franchises started in business as a Mom and Pop and grew through improvements and adapting over the years. Owning your own business does allow you to make the decisions without answering to anyone else, but it’s also a burden you carry with you. If you are ready to move your ideas into an established platform there are many ways to stay afloat and avoid failure.
Love What You Do
Many people go into business and have visions of instant stardom without much effort behind it. If you are expecting to work less and have all the time in the world for partying, vacations and down time, then you’ll probably not get through the first 6 months. However, if you have a product you are passionate about and feel that it’s something people can use or want and you are willing to dedicate most of your time for the first year or so to get it in motion, your odds are pretty good for achieving success. People at the top end who enjoy the riches and publicity of owning a huge corporation put their time in, did their research and gambled every penny they had to get it off the ground.
Learn From Your Mistakes
You will make mistakes and that’s ok, it’s all part of the learning and developing process. How you respond to the setbacks will determine whether or not you survive. Over budget, not enough merchandise, expanding too soon–all of these things and others will come along and you as the owner are the leader and it’s up to you to make the final call. This means that you have to step up to the plate and make quick decisions.
Fair Pricing for Products
When you first step out on your own, you may think it’s a great idea to decrease your profit margin to get quick sales. This is a fine line, similar to a tightrope. If you do this several things may happen that you may not want. First, undercutting your competitors is going to start you off on a rocky road in the business world. Secondly, if your profit is small then you may not have the financial stability to improve and grow your line. Third, while having something available at the lowest price may sound good, it may make potential buyers view your merchandise as “cheap.” Instead, a better approach would be to sell competitively and either offer services the others do not or add a few items to your arsenal that customers can only find at your business.
Have a Plan in Place
There’s more to running a successful business than having a great product. Sure the product is the key, but if your marketing, finances and staff are not in place then you won’t be able to present it. Put everything on paper. Include your supplies, rental expenses, employees, advertising and an accountant. In addition, you should also research your competitors and have a clear understanding of what the public likes and dislikes, and use their weak areas to improve your business. If you head into your new business with a clearly thought out plan you’ll improve your chances of survival.
Use an Outside Service to handle your Payroll and Hire an Accountant
There are multiple computer programs available that would lead you to believe that you can handle every aspect of the business without wasting money on an attorney or payroll service. While this may hold true in the beginning, having a service handle the payroll takes that away from you, freeing up time for other important matters like increasing sales. Since regulations and taxes vary from state to state, it’s imperative that you have an accountant on hand before the first sale. They know the laws and most importantly the gray areas that you can use to prosper legally without the fear of an audit. Also paying quarterly taxes avoids the year-end mad dash to find receipts. When you have an attorney in place they can guide you from the beginning so that after your first quarter you establish a routine.
Starting up a new business is exciting; it gives you an adrenalin rush. If you get back to the basics such as coming up with a concrete plan, develop long-term goals and dedicate your time over the first couple of years, your chances of achieving success are very good.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.