How to Survive and Thrive When Opening a New Business
If you’re thinking of opening a business, you’ve heard the scary statistics: a third of all businesses fail in their first year. It’s enough to give even the most experienced entrepreneur cause for concern, let alone a first-time business owner. But we’re here to tell you that the “wisdom” naysayers are sharing with you is wrong!
According the U.S. Department of Labor, 75% of small businesses make it through their first year, and 69% survive the first two years. Plus, small businesses (those with less than 500 employees) make up the majority of companies out there (99.7% in fact), providing 43% of the total U.S. private payroll. So, lots of others have been in your shoes and they’re making it work.
How can you set yourself up for similar success? Follow these initial steps and you’ll be well on your way to celebrating your first anniversary.
Make a plan.
Entrepreneurs who prepare a business plan are twice as likely to be successful, attract investors and qualify for loans. But your success is only as good as your research. When writing a business plan you’ll want to include realistic goals over a given period of time and establish a solid method for tracking progress. Create an itemized budget of your anticipated expenses and leave room for unforeseen costs. The more detail you include, the more prepared you’ll be.
You’ll also want to research your competition. Drive around their neighborhood, peruse their online sites and, if possible, visit their physical location. It’s important to learn what your competition is already doing (the services they offer, amenities they provide, etc.) so you can make informed decisions about how to position your business and what products and services to offer.
If you’re like most aspiring business owners, you don’t have the cash needed to cover the cost of starting a business, and borrowing money can be intimidating. The good news is that credit conditions are constantly improving. And one of those improvements includes a reduction in bank loan restrictions previously imposed on small businesses.
If you’ve written a solid business plan, the financial information you’ll need to qualify for a loan will already be prepared. For a detailed checklist of what you’ll need during the loan process, read the Small Business Association’s 6-Step Guide on How to Get a Business Loan.
Build a supportive network.
Surrounding yourself with mentors and peers is crucial to helping you objectively evaluate how well your business is doing. This group is also a great sounding board for you as you navigate the typical trials and errors of a new business owner.
The first step to creating this network is making yourself available. For extroverts this won’t be very difficult, but for those of you who don’t do well in social scenes, this may be a bit of a challenge. The reality is the more you give, the more people are willing to give back. So be proactive and host informal gatherings or organize casual events to talk shop with fellow business owners or anyone in your industry or local community whose business acumen you admire. The more you reach out to others, the more opportunities will come your way and the more people you’ll have in your corner when you need them.
The data says it all. More small businesses succeed than don’t in their first year. To ensure that your business survives, take the time to write a detailed business plan, secure your business financially and surround yourself with a supportive network.
If you have additional tips for how to survive and thrive in the first year of business ownership, tell us.