If you are thinking of leaving your job and going into business, there are a few things you should know. According to statistics, only 75% of new businesses survive their first year and only 50% make it past five years.
But this 50% chance of making it past five years should not deter you from actualizing your dream of owning your business because there are tons of benefits in being a business owner. You only need to work hard - a lot, be patient, and count on some good luck.
If the above statistics has not scared you away, and you are seriously considering going into business, the following ideas will help you survive your first five years as a startup.
Set aside some money
The hard truth is that very few businesses make profit within their first year. During your first and second year of doing business, you may find it difficult to cover your expenses and meet personal financial obligations. In fact, lack of enough funds is one of the reasons why businesses fail early.
To give yourself and your business a fighting chance, you should set aside a reasonable amount of money before venturing into business. Experts advise setting aside enough money that you can live on for a year. This money will also come in handy for when you want to cover certain business expenses and there is no money in your company account. However, be sure to keep proper records for accounting purposes.
Keep expenses low
Another factor that negatively affects the success of new businesses is when the outflow of cash is more than the inflow. This means you are spending more than you are making. Having a negative balance sheet will only drive your business into debt and eventual bankruptcy and it is your responsibility as the business owner to avoid this.
During your first few years as a business, it makes sense to keep expenses as low as possible until you have a guaranteed source of cash inflow. This may mean starting out from your home instead of renting that office space, hiring only when you desperately need people and postponing any expansion until your business demands it.
Plow back into your company
When you start leave your job to start a business, it can be difficult getting used to the fact that you no longer have a steady paycheck, and you may be tempted to start spending immediately your company starts making money. Unfortunately, this can harm the future of your business.
Successful entrepreneurs understand the concept of delayed gratification. So, instead of thinking immediately of the things you should buy for yourself, consider reinvesting the money back into your business. Use the money to explore new product options, get needed equipment or increase your marketing budget.
Have an Internet strategy
The dynamics of today’s business require a strong internet profile if you want to succeed, and so creating a strong online presence should be one of your main priorities as a startup.
There are essential online tools every business needs in order to succeed and investing in them will accelerate your business growth.
If you sell products, you should seriously consider creating or signing up with an ecommerce platform to push your products out. You should also make use of social media to meet new customers, engage old ones and direct the narrative of your business.
Build the right network
In business as in life, the strength of your network equals how far you will go. This is why you must surround yourself with the right people.
Anybody can be a customer, a contractor, or a partner, but the key to building networks is to locate successful people in your line of business and get close to them. You should also build networks with fellow professionals who have left their jobs to start a business. In this network, you can share experiences, gain insights and come across opportunities that would help your startup.
Focus on the customer
Your goal in starting a business may be to create an awesome product and service, but more than that, it is to meet the need of your customer.
No matter how beautiful your office is, and how great your products are, without customers, your business will slowly but surely close down. This is why you should pay special attention to your customers. Try to give each one a personalized experience so that they feel special. This will convert them from customers to loyal fans that will do your marketing on your behalf.
Once you can focus on customer satisfaction, all other things being equal, you have a good chance of surviving the first five years of business, and going on to be a success.
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