Four Start-up Tips to Help You Survive the First Year in Business
The first year as a new business is the riskiest time for any entrepreneur. Statistics show us that approximately 30 percent of all start-ups have failed within their first two years, with nearly half of all businesses being extinct after five years. Needless to say, we want to stack the proverbial deck in our favour as much as possible when expending capital, time and energy into making our dreams viable. For any entrepreneur who is worried about their future and wants to do as much as possible to limit the possibility of failure, the following four tips will be helpful in achieving that result.
Location, Location, Location
Whether you are operating solely online or via brick and mortar, “location” is key in surviving your first year of business. When it comes to e-commerce models, this means having an appropriate domain that conveys both your brand and the niche in which you are operating. For brick and mortar establishments, foot traffic and ease of access for automobiles are both valuable aspects to consider. If your potential customers cannot find you, then your business will never have a chance to get off the ground. Even if it’s a traditional venue, having a website is also important so you can be pinging for SEO and gaining local attention via the web.
Every business thinks that smooth sailing is in sight for them over the first year, but this is not the case. Having a business plan that addresses the common issues facing new business (rapid growth, accumulation of debt, potential lawsuits) is vital if you want to stay afloat. If you have not already, take the time to sit down with fellow owners and employees to discuss and brainstorm any possible scenarios that might befall your business in its infancy. Once you have an array of scenarios to consider, drafting an appropriate plan of action for each becomes much simpler.
Avoid Unnecessary Expenses
In your first year, the most likely scenario that can shut you down is the accumulation of excess debt. While many businesses will naturally develop some debt during this time, it is crucial that expenses are kept to a minimum to avoid unmanageable levels of debt and interest. Since it will most likely be several months before you are generating any real revenue, minimizing expenses at the onset will help you not only break even quicker, but keep your business able to operate in a healthy fashion throughout the first year. Tasks around the business that need completed (cleaning, for instance) should probably be handled by you until sufficient revenue is being generated.
Whether you are pinging for SEO online or wishing to get the word out around downtown, communicating with your customers – current and potential – is a key way to make it through the first year. Strike up a conversation at the counter about their experience with you or send them a questionnaire via email. When you combine this with consumer data and market research on your niche, you can help create a customized atmosphere that is optimized for repeat business.