Did you know that around 30% of businesses fail within their first two years in the US? Or that 50% are likely to have ceased trading within 5 years? That is a lot of startups that have failed to gain traction and attract the clients they needed to make a long term success.
With the US economy doing well right now, it may be the perfect time to take the leap if you are looking at starting your own business. But how do you make sure that you aren’t one of the 30 or 50 percent of business that will fail? No business owner goes into this with the view it will fail but as the figures show, inevitably, some will.
So how do you make sure that isn’t you? What pitfalls do you need to avoid to make sure your business goes from strength to strength over the years? Well, as we all know preparation is key. Following these steps can help you make sure you are ready to succeed in your business from the off.
Do Your Homework
Before you do anything else, you need to make sure you have a solid business plan. Starting a new venture isn’t like it is in the movies. It takes time and patience and a heck of a lot of research. Knowing how and where you want your business to go in the first 12 months needs to have a plan. For it to have any chance of succeeding you need to know everything you can.
Investigate the market, your local area and other companies offering the same thing. Is the market saturated for what you are offering? Is there a gap in the market that you can fill? Knowing your competition and the market for your product is so important to help you get an idea of how successful your business can be.
While the idea of opening up your own bakery may be a lifelong dream of yours, going into business in an area where the market is saturated could be detrimental to your dream of making your business succeed. This is where doing your research is so important. Survey the area you will be making your base and the market for what you are offering and find your space. It may be that you need to tweak your ideas a little bit, find something you can offer that no one else does so you can slip into a gap in the market that was waiting for you.
Location, Location, Location
Having a prime location can only help boost your visibility. Whether you are after store premises or office space, location is everything. You may have the best product or service in the world but missing the mark when it comes to a prime location spot can really damage your chances of making your startup be the best it can be from the off.
If you have followed the advice from the previous point and put in the research, you should easily be able to identify the best location for your business. If you are planning on working from home, but need to accommodate face to face meetings, it may be a good idea to look for ad hoc office space.
Bond Collective offers various different office solutions to meet a wide range of needs, from one-off office space rentals where you can meet clients, to sharing office space with other like-minded professionals to renting out private office space on a more long term basis should you have grown out of your home office.
Generally speaking, you need a lot of capital when looking to start a new business from the ground up. with investments ranging from $2,000 to $3,000 for microbusinesses to $30,000 plus for bigger startups. If you are looking to loan finance for your business, make sure you do your research and choose the appropriate loan for your needs. One thing you don’t want to do is start off with limited funds and then struggle to keep the company afloat if you aren’t bringing in enough money.
As an estimate, it is advised to have enough funds to cover for at least 6 months, ideally up to a year. This will give you the best chance of making your new venture a success without worrying about how much you are making and not being able to meet all your expenditure.
A detailed business plan that is realistic and thorough, will give you a more accurate idea of the kind of expenses you can expect. Being able to meet these for the first 6 months at least will give you more time to focus on doing what you are doing without having the added pressure of needing to make money from day one.
Also, be realistic about you can expect to achieve in your first 12 months. Goals are a great thing to help you build on what you have but concentrate on building a solid foundation first. You wouldn’t build a house on sand, so don’t try to expand before you are established enough to branch out. Once you have built your foundations, then add new products, services and possibly locations. Put simply, don’t try to run before you can walk.
Once you have the basics in place, you can then look at ways of diversifying your business with the same care and attention you put into your initial start-up.
In a nutshell, it pays to take the time and care before you put your ideas into action if you want to give your business the best chance it can to succeed. Careful planning and research of not only similar business ideas and locations but also of the realistic finances you will need to help you concentrate on what you do best and not on how much money you are making.
Impatience leads to mistakes and crucial errors being missed. So if you don’t want your business to be one of the 30% who doesn’t make it past the first two years, it makes sense to put just as much effort into the planning stage as when you are up and running.