If you have your own business, you might have heard several people talk about business failures. If you listen to these naysayers, you’ll start to believe that about 90% of new businesses are guaranteed to fail.
However, this is not the case. According to the US Bureau of Labor, about 75% of new businesses tend to survive their first year, 69% continue for the first two years, and about 50% stay up to five years.
Below are some tips you can consider to help you get through the first five years of your business:
Make a Commitment
When you choose to start a business, you need to make a commitment to yourself that you will persevere for at least five years.
Most people say that the first few years in a business are the most challenging. This is especially true when you are new to owning a business or have no experience dealing with bookkeeping, accounting, and managing your staff. But, on the bright side, these challenging years are the chances you have to learn about how businesses work.
Make a Business Plan
A business plan is needed, especially when you are looking to get a loan or an investment. It’s a great way to sharpen the vision you have for your business. Also, creating a business plan can help you answer the following questions:
- What business problem are you trying to solve?
- What is the timeframe for your business launch, profitability, and sales?
It’s vital to know that you don’t need a very long plan. Your business plan should be concise, but detailed enough to show if you have a good business model and target market.
Take Notice Of Long-Term Success
It will help if you always think ahead and not get swayed by the thought of receiving a quick profit. If you have a business plan, it’s best to follow it faithfully. Stick to it for long-term success and everything will fall into place.
Have Good Credit
The longer you stay in your business, the better chances you have in establishing good credit. Lenders prefer giving loans to business owners who have been running their company for about three years. As a result, during the first few years of your business, it would be best to maintain good credit. You can easily do this by paying your bills on time.
Keep Your Business Expenses At Low
Most new businesses fail because they run out of cash flow. It makes sense to keep your business costs as low as possible until you start to amass great sales. Here are some ways to do this:
- Hire people your company really needs (consider freelancers and contractors for the rest);
- Rent an office that’s affordable and suitable for your business;
- Only spend your money on things that your business really needs.
Reinvest Back In Your Business
If you moved from having a job to running a business, it would be challenging to give up having a paycheck. However, it is best to reinvest the first money you make back into your company, marketing, and product. Most of the time, business owners are the last ones to get paid during the first year.
Get Loans Or Line Of Credit When Needed
Getting a loan or a line of credit is a good option, especially if you have a home or personal asset to pledge as collateral. However, it’s essential to know that other lenders can also lend you money without collateral. If you decide to get a loan and want to pay it back, it is recommended to use direct deposit to send the funds.
Focus On The Customer
It should be your goal to create a great business or product. Doing so will attract more loyal customers. As a business owner, it should be your priority to learn and adapt to your customer’s needs. If you build something that consumers want, sales will surely follow.
Have A Strong Team
Consider having a versatile work team in your new company. If you have a team with a great mindset and skills, you’ll more likely survive the first five years of your business. Startups tend to have many challenges, such as adjusting to the market, constantly making changes, adapting to something new, and analyzing market situations.
The challenges mentioned cannot be handled by one man alone. It requires a lot of teamwork. Besides that, data shows that startups with a co-founder tend to survive longer than solo founder businesses.
To Wrap It Up
It’s not easy to run your own business. In fact, several business owners don’t survive for a few years. However, understanding and applying the tips above will certainly help your business stay afloat in the market.