When you start your own business, there’s no guarantee that your business will survive. Nearly 50% of all small businesses fail within the first 2 years. The 2 main reasons for businesses failing is the lack of a proper Business Plan and the lack of capital.
Before you go overboard getting into debt to finance your business you need to have a strong Business Plan detailing your strategies on how you are going to survive and thrive in those first few years.
Here are some ideas to consider from businesses that have thrived for 5 years or more and what they have in common.
1. All successful businesses start with an idea. Does your idea stand out from the rest? How do you know if you have a good idea?
Does your idea provide a solution to a particular problem?
Does your idea satisfy a need or want? (what people want or need are two different things)
Does your idea create an opportunity?
Most successful businesses have found a solution to fixing problems (real or perceived) or have products or services that bring enjoyment to their customers. Successful ideas should create a repeat need for a product or service in your target market.
2. If you can answer yes to the following questions then your chances of survival are better than most.
Is there a ready market for your product or service? (It’s easier to fill a need than it is to try to create a new market)
Are your products or services affordable for your target market? (it doesn’t matter how good your products or services are if your potential clients can’t afford them, they won’t sell)
Are your products or services valuable to your potential clients? (If they want it but don’t believe the value is there they won’t buy it)
YOUR KNOWLEDGE AND ABILITY:
Do you have the knowledge and competency to provide the products and services you want to sell? If not, do you have partners or employees that can fill the gap on the things you are not able to do or don’t like to do? Do you have sufficient manpower?
Do you have a consistent supply source for your product? or do you have the ability to provide the service you are offering on an ongoing long term basis to your target market?
Do you have a USP (Unique selling proposition) that will help you maintain a competitive edge?
Do you have a Brand that properly represents you and your product and is consistent throughout your Business so it is memorable and separates you from your competition?
You need to develop a strong Business Plan. The idea is that your business plan should be your ongoing road map to use on your business to be changed and tweaked as you go along so you always know were you are and were you going. A Business Plan is not just “my idea is good so I deserve to get funding” – that just doesn’t float with banks or investors.
Make sure you use your Business Plan, don’t waste time creating it to file it away in a file cabinet. Your business plan will help keep you on course to growth and success and keep you on track with your goals.
Next you need to ensure you get sufficient funding. Having enough capital to keep your business afloat is vital to the survival of your business. Many small business entrepreneurs tend to underestimate how much capital they will need and forget altogether to allow for cash flow. The first few months of your business are likely to be cash strapped as you develop and grow your market and you need to ensure you have enough funds to survive during that time. Be realistic with your figures and allow a cushion for unexpected expenses.
In addition to the usual sources of funding – banks, investors, family etc. here are some resources you might be able to tap into for grants or loans.
Your local Small Business Associations
Small Business Development Centers
Economic Development Centers
These resources can usually point you in the right direction even if they cannot assist you directly.
Model other successful businesses – what do you like about them? what do you think they are doing that makes them successful?
No one can do it alone, even with great skills and abilities no-one does everything well. You likely know your own strengths and weaknesses already. Rather than ignoring them and having them affect your business find a Mentor who can advise and help you in your weak areas.
If you build a good business plan designed to succeed, you can create a strong business to pass onto future generations, and a business that other entrepreneurs will look to as model for their businesses.