Nearly half of all small businesses fail within the first two years of enterprise. One reason being under-capitalization, and the main reason being inadequate planning.
So, before you sell off your livelihood, or go into financial debt for your business, you need to know if your business is going to not just survive, but be good enough to thrive! There are three things that businesses should consider to be successful. Businesses that have been open for five years or longer tend to be the ones that have taken these into consideration.
1. The Idea
Every business start-up should always begin with an idea. Think of something that makes your business stand out from all the rest. So, how do you know if your idea will cultivate a successful business?
Your idea is probably good if your answer is yes to any of the following questions: Does your idea provide a solution to significant problems for your target market? Does it appease a need or want in the area you’re starting your business in? Does it create an opportunity?
The most successful businesses either fix -real or perceived- problems, or they advance your customer’s pleasure. In turn, your business creates a reoccurring need for a certain product or service among the target market.
2. The Market
Your chances of surviving business are increased if you acknowledge the following questions: Is there an existing market for your product or service? It can be difficult to create an entirely new market, so it is easier to create a business that fills a need in the market.
Can your target market afford to buy your products or services? Your idea could be amazing and unique but still be unsuccessful if your target market can’t even afford what you are selling. You need to find a balance between making a profit but also being affordable.
Will your target market identify your product or service as valuable? Again, customers may want your product or service but think it’s not worth the money. If this happens, you won’t make any sales and your business will fail.
3. Your Ability to Create A Successful Business
Do you have the staff, resources, and the knowledge to be able to consistently provide your products or services? Can you preserve a competitive advantage? Do you have enough manpower to run your business? Would you be able to purchase the supplies and materials you need over time?
Your first step is always to create a substantial business plan. Your business plan should be more than “Why my business idea deserves to get funding”. Once you’ve spent a substantial amount of time creating your plan, don’t then toss it in the bottom drawer of your desk (which, unfortunately, is a common occurrence). Your business plan should be a roadmap that helps keep you on course and reach the goals that you have outlined for your business.
The second step to your business surviving is making sure you have enough finances. Although the term “bootstrap entrepreneur” characterizes most small business owners, having enough money to keep your business afloat is critical towards survival.
Be sure to create a financial analysis of your business. When doing so, it’s important to stay realistic about costs and expenditures, so that you give yourself the bolster needed to succeed.
If finding the finances for your business is a problem, because you don’t have enough credit, or due to other problems, really take the time to look into resources that are possibly available in your area. There are an extensive variety of grants and loans (as well as microloans) for entrepreneurs, if you know where to search.
Some great resources will be:
-The Small Business Administration
-The Federation of Small Businesses
Don’t be afraid to use other successful business models as a guide for your own. When starting, you need to look around and take a note of what businesses are successful. Why are they successful? What is it they’re doing, specifically, that is working? What attributes do you applaud, and why? Be unique, but consider taking pointers from an already successful business.
Find someone who will make a great mentor. Entrepreneurs have strong skills and abilities, but no one does everything perfectly; you should already know what your strengths and weaknesses are (if not, you should figure them out!) Rather than ignoring your weaknesses, find someone who can help build your skills in your weaker areas and offer advice for getting what you need.
In order to succeed, you must take the time to plan. Your business could very well be enjoyed by future generations, and that other small business owners will look at yours as a model, if you consider the steps in this article.
Courtney is an Editorial Executive with a degree in Music Composition and Technology for Film and Games. She spends her spare time composing her own soundtracks.