Attention entrepreneurs: Are you eager to kickstart your own business? Of course, the notion of being your own boss and taking your idea, nurturing it with some hard work and ingenuity, and grabbing hold of a little luck in order to turn it into a successful venture is an exciting prospect—and you may be itching to just throw caution to the wind and run with it as quickly as possible.
That said, it may be in your best interest to slow things down a bit, temper your excitement with a little caution, and take some more cautious steps forward. After all, the business world is full of people who started off with grand plans for their new businesses but had their entrepreneurial visions knocked out of orbit by harsh reality, failed executions, and poorly-devised and ill-timed decisions.
According to a recent article by Investopedia, “The Small Business Association states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. The SBA goes on to state that only 25% make it to 15 years or more. However, not all of these businesses need to fail. With the right planning, funding and flexibility, businesses have a better chance of succeeding.”
So, perhaps the first question you should consider asking yourself when planning to start a new business is if you want to be on the winning or losing side of these percentages. Sure, that may not be a difficult one to answer, but whether or not you’re willing to do the requisite amount of careful planning when you’re at the critical initial stages of getting your business off the ground may a bit more tricky. If you’re looking to stack the odds in your favor, then consider the following strategies on how to start a small business, according to financial experts who’ve seen it all and know the most common mistakes and pitfalls to avoid.
Define your value
You may have nothing but the best intentions for wanting to start your own business, but are you sure it’s one that’s poised to generate value (think revenue)? Sure, money isn’t everything, but it is an essential component to making your business take off and be sustainable, so make sure that your venture is one that has a reasonable chance of returning on your investment of blood, sweat, tears, and start-up capital.
Back up your hopes with analytics that project a clear and realistic trajectory into the black at some point in time. Also be sure to define how your business idea and brand stand out from the competition, disrupt your industry, and contribute substantively to the world—because if they don’t, then what’s the point?
Plan (and plan some more)
Enthusiasm is a great thing to have when starting a new venture, but it will rarely sustain a business past initial takeoff. Get grounded and make sure you plan—both for the immediate future and for what lies ahead. Temper your entrepreneurial excitement with a solid business plan that legitimizes your goals with demonstrably achievable milestones. (If you’re going to court startup capital from outside sources, this is an absolute must.)
Also, take the time to do some long-range projections for your business (try one- and five-year plans to start); these can always be revised as your business idea grows and evolves, but they will be a huge help in determining whether you’re on track for success or a collision course with failure.
No person is an island, and your business shouldn’t be one either. Savvy entrepreneurs know to leverage their networks to take full advantage of the knowledge, talent, and experience of people in their orbits in an effort to make their business ideas. Regardless of your industry, running a business takes a wide and varied set of skills, and unless you’re an indomitable entrepreneurial wizard and jack-of-all-trades, do yourself a favor and rely on the expertise of others to benefit your new venture. Don’t be afraid to pay for some outside advice and guidance if need be—consider it a sound investment.
Learn from mistakes
The truth is, almost no one gets everything exactly right when starting a business. But often, the difference between a successful business and a flop is an entrepreneur who learns from their mistakes. You can either self-assess regularly, take note of what went wrong, and make a swift course correction… or sit back, avoid self-assessment, and remain doomed to keep repeating failures. Consider the missteps that happen along the way as valuable learning moments, and use them to your advantage as you trudge forward.