Congratulations! You’ve decided to venture out of your comfort zone and start your own business. You’re now a part of around 10% of people in the US labor force who own their very own business, but just because you’ve opened the doors doesn’t mean that they’ll still be open a few years down the line. Now the battle really begins and you must learn how to survive (better yet, thrive) as a new business owner.
How to start a successful business
Surviving in business isn’t as hard as you think. According to the U.S. Bureau of Labor, the odds are actually in your favor. As much as 75% of new businesses survive the first year. It’s only when you get to the five-year mark that things tend to go sour, with business owners given a 50/50 chance of remaining open. And if you don’t leave it up to chance, your business can be on the right side of the coin toss.
What can you do to make sure your business not only survives in its early days but is on the path to success?
Finances play a huge part in business success, of course, so here are our top tips on how to survive in business and avoid common early financial mistakes.
1. Learn to keep business expenses low
Did you know that around 70% of lottery winners end up bankrupt (according to the National Endowment for Financial Education)? But what’s that got to do with business? Well, when businesses receive their first startup business loan, it can be tempting to spend it all at once.
It’s time to tighten those purse strings and learn how to survive in business – and really survive.
To make sure that your finances last, be sure to follow this golden rule: Keep expenses (especially fixed expenses) to the bare minimum.
When you’re first starting out, you could try to avoid hiring and rather outsourcing to freelancers and contractors until you start to build a good revenue – at which point it would be a good idea to hire high-quality employees.
Is office space essential? In your businesses early days (depending on the industry) it may be best to wait on it. Try working from a home office until your business is bringing in a steady income.
2. Learn how to manage your cash flow
Monitor every dollar that comes in and every dollar that goes out. Cash really is king, and if you want your business to survive, you need to remain cash-flow positive. This is especially crucial in the first six months of business before you’re likely to be eligible for an unsecured business loan.
Determine your business budget and stick to it – no exceptions. We highly recommend using an accounting software to help you budget (such as Intuit QuickBooks). Ideally, it would be best to have a long-term budget plan. Businesses that make the mistake of thinking short-term are far more likely to close. Statistically speaking, the majority of businesses that succeed in the long-term are businesses that think and plan ahead long-term.
Moreover, should you find yourself in need of funds to manage your cash flow there are plenty of options – check out Become to make sure you find the best funding for your needs.
3. Reinvest in your business
Early-day customer payments should be reinvested into your business and any extra should be kept in reserve. When we say ‘reinvest’ we’re talking about marketing, perhaps getting a good website, investing further in your product and hiring/training.
Although it’s obviously important to pay yourself to live, keep your salary as low as possible at first. You should also be prepared to lose money in your first year or two, you’d be surprised at how normal this actually is!
The first two years are hard – fact.
As you enter into your third and hopefully your fourth year in business, you should have straightened out all the kinks and be starting to smell success.
4. Establish realistic financial goals
Take the time to set yearly, monthly, weekly, and even daily financial goals.
When it comes to setting your revenue goals, don’t simply set a generic goal such as ‘increase sales’, this is a classic example of what NOT to do when starting a business.
You’ll need to work toward specific revenue goals if you want to be successful. At first they should be small so that they’re realistically achievable, and more importantly, should be measurable so that you can review and adjust them quarterly.
5. Focus on customer acquisition
At the end of the day, it doesn’t matter how awesome your product is, you need customers to buy it. Gaining customers should be your primary aim – customers mean revenue.
Be sure to focus on your customer’s needs. How easy is the purchasing process? If your product is online, how simple is the ordering process? How fast and attentive is your customer support?
Especially at the beginning of your business, you’ll need to listen closely to your customers and adapt, so to ensure that you’re offering them the right product or service that meets their needs.
The sooner you give them what they need, the sooner you’ll start making sales and earning revenue.
6. Time is money
Time really is money so spend it wisely!
Just because you’re constantly busy and working your a** off, doesn’t necessarily mean that you’re being productive. Any time wasted on trivialities is time that could be better-spent revenue-generating. Be selective on how you spend your time and resources, and learn to say no to non-productive activities.
As a business owner at the beginning of their venture, we’re sure that you know about the 101 tasks that seem to keep building and building and there are only so many hours in the day. This is where you’ll need to learn (fast) how to prioritize your time.
We advise organizing your tasks and ordering them in terms of which are most important. When prioritizing, think ‘which of these tasks will get me closer to my goal’ and ‘which will lead to faster revenue generation’ – these are your important tasks. Rather than working on many tasks at a time, aim to work on completing a task and then moving onto the next.
Bouncing back-and-forth between a few tasks may make you feel like a multitasking guru, but actually, this can slow down your productivity. Better to have a few tasks completed than many tasks half-done.
Some of these tips may seem obvious, but now that you know how to start a successful business hopefully you’ll be able to carry on the success. You’d be surprised at how many startups fail by making simple, obvious mistakes.
We hope you found this advice useful and wish you the very best of luck in your business venture!