Surviving your first year in business

So now that you’ve started up your small business, how do you survive the first year?  Unfortunately, as many as 70% of businesses do not survive that challenging first year. “In most cases, this is due to some basic mistakes made by their owners.  A lack of proper finance management, clear vision and worked out profitable business ideas are amongst the most common ones.”  In essence, the chance of your business surviving its first year is in your hands alone.

Step one: Stick to your original goals.  Your goals allow you to create a roadmap for your business’s success.  It might be difficult at times to not stray from your initial concept as you are flooded with new ideas daily.  But stay the course you were originally on and success will follow.

Next, measure your progress.  “Make a habit of regularly checking where you are against your goals, sales targets and short term plans.”

Expect the unexpected.  "There are a lot of start-up costs-entrance fees to trade shows, gas and food when you spend your day meeting with people, having your website built and hosted, company vehicle, mailings, phone costs, business cards, brochures-that I don't think people even think about when they start a business."

Do your homework.  A lot of businesses fail because they don’t do the required research and development required to succeed.  As I’ve said before, know your competition.  Ask the pertinent questions as to what is already out there in the marketplace.  Where is there a lack of need?  What are consumers clamoring for that there not already getting?  And if an idea is already out there, how can you expand on it and make it better and market it to a target audience whose needs aren’t being met?

Track your finances.  Sometimes they can be misleading.  A lot of money may be coming in yet you still might make a loss.  Knowing if your company will make a profit is likely the most important piece of information you need to know during your first year of business.

Secure funding.  You can fund out of your own pocket, ask family members for loans or try your luck at a bank.  "Start small enough so that the risks aren't so large, you can't face them.  Why not start part time on a small scale, go through two or three iterations by yourself to see if it really does make a 20 percent return on your effort?  If it doesn't, you haven't lost too much.  It's a lot better than borrowing $25,000 from somebody and it not working."

Make sure you have enough savings put away to take the risk of starting your own business especially if you don’t want to seek a loan.  Most experts say you should have 8 months to a year’s worth of savings in the bank before venturing out on your own.

Seek advice.  One of the important ways to ensure that your business is running smoothly from the start is by not doing it alone.  Network with the right people; confide your ideas in close friends and family.  You can also use books, blogs, forums, mentoring programs or professional courses too.

Surround yourself with successful people.  Hang around those who have made it big in business or at least understand what you are going through as they might have recently started up a small business of their own.  This way you are constantly learning which leads to growing and bettering your idea.  They can point you in the right direction and give you tips on how to succeed.

Keep an eye open for new opportunities.  You never know where the next opportunity will come from in business.  “Look out for signs that someone might be looking for what you are selling, or is just looking to network. You never know where this relationship will take you.”

Prepare to adapt to change.  The business environment is constantly growing and evolving.  In order to survive you will have to adapt to new trends, new technologies affecting your business social and economic changes and many other things.  Learn to change and accept new things when they come.

Lastly, remember to save not spend.  Think twice before every purchase.  “It is quite tempting to get the latest equipment, software or state of the art offices.  However, in many cases you don’t need all this.  You can use the equipment you have at the moment.  You can use open source alternatives to a popular software and work from home or a co-working space, if possible.  Save money and bootstrap your business.  You will need every penny before your business turns really good profit.”

Here are some articles you might want to check out about surviving that challenging first year in business.

“5 Tips for surviving your startup’s first year”: http://www.entrepreneur.com/blog/223400

“Member to member – surviving your first year in business”: http://metro-edge.org/2011/08/member-to-member-tips-from-fellow-young-professionals/

“What to expect in the first year of business”; http://www.gaebler.com/Tips-on-Surviving-Your-First-Year-in-Business.htm

Until next time…