Although there are between 25 to 27 million small businesses in the U.S, a significant percentage of new enterprises fail every year. Here we provide seven useful ways to avoid that failure when running a business:
1. Start a Business for the Right Reasons
Starting a business with a focus on a passion, or based on educated study and investigation that produces a product to fulfill a shortage in any given industry, are both great reasons to take off on a new venture. But a majority of entrepreneurs seek to start their own business in order to make more money or be their own boss and generally are disappointed within the first year when the business does not take off as they expected. Businesses are a lot of work and if it is not an industry or product you are passionate about you will often struggle to find the motivation to give your new business the attention it needs.
2. Be Prepared
Being unprepared for time commitments, capital investments, and day to day operations for running a business can lead to catastrophe. As a business owner and manager it is important to structure your business properly with schedules, duties, and daily obligations of employees so that production is efficient and effective. Always be prepared for mishaps, such as an employee leaving, natural disasters, and market shifts.
3. Have Access to Capital
Having readily available working capital can help ease the stress of many unexpected situations. Predicting the correct amount of working capital needed to cover business operations as well as unexpected obstacles that may arise is important. Businesses that do not have enough capital to cover the ramp up period before the business can cover costs and expenses from revenues may find themselves at a serious disadvantage from the start. Trying to correct a working capital shortfall after the fact may already be too late and it is better that a business starts out with plenty of capital to get through the hurdles during the start up phase.
4. Location. Location. Location.
Picking a location for a business can be the difference between success and failure even if the business is not in retail. Determinants for choosing a desirable place consist of considering the proximity of competitors, accessibility, and where the market or audience target is for your product.
5. Have a Marketing Strategy
The critical nature of a solid marketing plan defines the target market and the necessary steps to reach them effectively. Devising a strategy in the planning stages allows your business to hit the ground running as soon as you open your doors. Know your product audience, know what they are looking for, where to find them, and how your product or service differs from what is already out there. For start-up businesses, marketing strategies should be developed around optimal ways to reach a large portion of the target at as reasonable cost.
6. Don’t Grow too Big too Fast
Owners often confuse success with expansion. This common mistake can lead to bankruptcy. Focus for new growing businesses should be a slow and steady growth including building a substantial client foundation and a healthy cash flow before any larger expansion plans ensue. Financial stability helps set a stable base for expansion. After reviewing your market, research and analyze the requirements you will need for successful growth.
7. Get Online
A professional looking, well designed website easily enables users to find out information about the company and order products and services. The internet can be one of the most effective ways to market your products and services. Those without a website may lose patrons to those that have online access. Ensure that you have a website that meets the needs of the customer, defines product benefits, and strengthens your brand recognition.
In the end, planning and preparation are vital to running a business. A willingness to recognize key factors for avoiding failure and planning for hurdles that will come your way creates an optimal path for entrepreneurial success.