7 Tips to Surviving Your First Year in Business
Starting a business is difficult – keeping it running over the course of time is much harder.
According to the U.S. Bureau of Labor, roughly 50% of small conventional businesses fail within five years. A third of them might even make it past a decade. When it comes to online and tech startups, however, about 90% of them will fail due to avoidable circumstances.
Most of the time, the business idea is unprofitable or impractical, to begin with. Others run out of cash, get outcompeted by bigger companies, or suffer from having the wrong people.
In these cases, it’s easier to call it quits, pack up, and start over. But until then, you shouldn’t let these negative statistics demotivate you.
To make sure you survive your first year in business, here are seven things you should remember.
#1. Have a Written Business Plan
Without establishing a clear direction for your business, you are gambling your money away on startup costs. It doesn’t matter if you’re launching a new website or opening a local store. You need a written plan to establish a clear direction for your business and set milestones that measure growth.
A basic business plan includes the following:
- Executive Summary – What is your company’s mission statement? Who are the founders? A good strategy is to write the executive summary last once you’ve figured out the rest of the details.
- Company Description – What does the business hope to accomplish? How is it different from similar companies?
- Organization & Management – Who are the owners and what are their stakes? What are their skills? What will they do?
- Market Analysis – Who are your competitors and target market?
- Marketing & Sales – What are your sales and marketing strategies? How will you funnel leads into sales?
- Service or Product Line – What does your company offer?
- Financial Projections – After analyzing the market, your strategy, and product lines, where do you think the company will be—financially—in the future?
To help you write your business plan, you can refer to this post from INC.com for downloadable templates.
#2. Build a Financial Cushion
Everyone gets the urge to quit their day job and dedicate all of their time to a startup. While this is understandable, you should have at least a year’s worth of salary saved up in case of emergencies. You also need to wait until your business starts paying for itself before you quit your day job.
Remember that companies may burn more money than they generate, especially during their early stages. A risk-free strategy is to pay for business expenses with your money, but you can also consider getting short-term loans for bridging small financial gaps. These come in many forms – from working capital loans that cover business expenses to short-term loans that can be used for marketing projects.
Here’s a post on small business loans and how they can be used for your startup.
#3. Automate Repetitive Tasks
The key to cutting down business expenses and maximizing revenue is to be more efficient. One way of doing this is to implement automation for repetitive tasks.
Today, there are plenty of automation tools you can use for digital marketing activities. The most flexible platform, however, would be IFTTT – If This Then That. It works by integrating hundreds of different services into automated workflows or “applets.”
To use IFTTT, you can choose from the preexisting applets on their site or create your own. For a list of applets that startups can use, click here.
#4. Pinch Pennies
You may have heard this advice before, but it’s worth repeating. If you want to succeed in business, you need to live small and make every dollar count. Make no room for discretionary expenses and create a monthly budget for your business and your personal life.
If you’re reading this, you’re probably better off than other successful entrepreneurs when they were just starting out. All it takes is some self-discipline and resilience in the face of challenges.
#5. Hone Your Negotiation Skills
Negotiating is an essential skill that allows businesspeople to get the most out of every transaction. Unfortunately, very few entrepreneurs possess it innately. Worse, new entrepreneurs like you are easy targets for others who’ve been doing it for years.
You may not become a master haggler overnight, but you can start with simple things like saying no to clients or customers who consistently take advantage of you, especially when discussing price. It also helps to conduct a thorough research of your competitors and industry altogether. This will allow you to pitch sensible deals and try to be firm with your propositions.
#6. Invest in Customer Service
Customers are the lifeblood of any business, and it should be your top priority to keep people flowing in. The good news is, customer service is one of the few things you have over established brands. Since your company is new, it’s easier to divide your attention and tend to the needs for your first few clients.
Still, you should start thinking about automating your customer service process. One strategy is to create autoresponders to prevent prospects from losing interest. This can be done with an email marketing platform like MailChimp, Aweber, and GetResponse.
Remember that communication is the key to providing excellent customer service. For additional tools that can help you with customer service, you can refer to this post from Salesforce.
#7. Adapt to Survive
Finally, the most important rule to surviving in business is to adapt. Learn how to measure results and look for things that can be kept, changed, removed, or added. For this, you need to identify Key Performance Indicators or KPIs for your business.
Looking back into your business plan, identifying the business metrics you must track should be easy. In addition to financial KPIs such as working capital, operating cash flow, and gross profit margin, you should also pay attention to performance-related KPIs that align with your business.
For example, if you’re running a blog, you should measure the daily traffic to your site and specify a target amount that will allow you to accomplish your business objectives.
You can refer to this post for a list of KPI-tracking tools you can use.
Tweak Your Biz is a thought leader global publication and online business community. Today, it is part of the Small Biz Trends stable of websites and receives over 300,000 unique views per month. Would you like to write for us?
An outstanding title can increase tweets, Facebook Likes, and visitor traffic by 50% or more. Generate great titles for your articles and blog posts with the Tweak Your Biz Title Generator.