Your first year as a business owner can be challenging.
You will face obstacles and you will face competition.
At times, you may be tempted to give up.
This article will help you beat the odds. You can go on to grow your start-up into a highly successful established company.
Not everyone succeeds.
According to statistics from the Small Business Administration, about one in five small businesses fail in their first year.
Only half survive five years or longer. Many times the seeds of failure set in during the first year. The business limps along in the following years until it eventually dies.
Using our five suggestions you can establish the ground rules for success during the first year that will set you on the road to long-term success. Examine each tip carefully.
Each builds on the other so that use of them all will help to put you on the road to success.
Display Patience, Rome Was Not Built Overnight
When you start your own small business you are excited about it (and you should be). Because you are determined to make it a highly profitable and successful company you expect it to show profitable results from Day One.
That’s probably not going to happen.
Most small businesses fail to realize a profit in the first year. Sometimes it can take as long as three years before more money starts rolling in than is flowing out.
The reason is that small businesses need to be well established, find their niche in the market, and become known through inventive marketing. Such a process can take time.
It is important, therefore, to realize that failure to make a profit at the outset or even in the first year does not indicate that the business is failing.
You need to have the patience to work hard at building up the company so that in time it does score a profit.
Perseverance Will Get You Through
Along with patience, you need to display perseverance. Even large corporations start small. Examples abound of founders of highly successful businesses working extremely hard to sell their products or service in the first year.
They encounter obstacles, but they persevere, gaining clients or selling products steadily, often one at a time, until they establish a foundation that builds on itself.
Winning entrepreneurs are determined people. They persist against all odds. It takes courage. It takes guts. You might face a sharp downturn in your local economy.
Or a major client runs into problems and cancels orders. But perseverance will help you win in the end.
Such perseverance is particularly important in the first year of a business.
Later, with an established setup, a company can survive more easily. It is in those first months that the challenges are greatest.
Analyze, Know Your Numbers
An essential element of running any small business is to know precisely where you are coming from, where you stand, and where you are going.
You can achieve this goal by keeping careful track of your money, your income, and your expenses. The best way to accomplish this goal is to keep your own books.
Rather than relying on a bookkeeper to assess where you are financially, you will benefit greatly from knowing that information yourself.
An analysis will show you whether you are spending too much in one area, for example. You could be wasting money on expenses that are not helpful to your business.
An analysis of your financial situation also will help in enabling you to know when to buy assets and, if called for, when to sell them.
At times the economy could have swung against you. Another reason might be that the market for your product might have evaporated. Again, your financial analysis will point to the problem.
Find out what the problem is. Adjust what you are doing and find your way around the obstacles. Soon you will be on the road to success.
Be prepared to adjust your business operations if necessary
Sometimes in spite of applying patience and perseverance your business does not take off. No matter how determined you are, you are getting nowhere. In that case, your business model might not be appropriate.
If you have shown patience and perseverance and you are still getting nowhere after several months you might need to reassess the way you are doing business and what you are trying to achieve.
One suggestion by Jessica Erickson of PhoenixNAP Hosting is, “Get a group of your smartest and most successful friends in a room and ask them their honest opinion about your idea.”
Among the reasons could be that the market for your product or service might not exist in any meaningful way.
You could be failing to fulfill a need, which is an essential component of a successful business. You might be trying to compete against big corporations on their own turf, which is a recipe for failure in itself.
Or you might be trying desperately to make a lot of money rather than concentrating on the real reason you should have started your business, which should have been to produce a quality product or service for which you have a passion.
Borrow money, ONLY if you need to
During your first year as a business owner, as you establish your business with patience and perseverance, you might need help in the form of cash.
An infusion of borrowed capital can enable you to survive a temporary downturn in the economy.
It can tide you over while you build up your clientele or find better ways to market your product. It can also be a great aid should you need to adjust your business model.
Here the key is to resist the temptation to rely on the money to substitute for the hard work that you need to do to get the company growing. It should work as an aid.
You should borrow money only for as long as you need it and only to help you over a bump in the road. It should not substitute as a source of income.
You can do it
In your first year as a business owner, these tips should help you overcome obstacles and set your new venture on the right course.
They might prompt you to look at it in a new light.
Above all, with the help of these guidelines, you can make it through not only the first year as a business owner but the following years as well. Go for it. You can do it.