A Step-by-Step Approach to Surviving and Thriving
By Caron Beesley
Entrepreneur and founder of The Body Shop Anita Roddick once said: “Nobody talks about entrepreneurship as survival, but that’s exactly what it is and what nurtures creative thinking.”
The first few years of small business ownership are undoubtedly the toughest, a huge test of entrepreneurial character. And data proves that getting it right is as challenging as ever. According to the SBA Office of Advocacy, the survival rate for new employer firms stacks up as follows:
- Seven out of 10 new employer firms survive at least two years
- Half survive at least five years
- A third last 10 years
- A quarter stay in business for 15 years or more
So, what strategies and tactics can you employ as you venture through the early years of business ownership? Below are some year-by-year approaches to consider:
Year 1 – Be Prepared for the Unexpected
Whatever your field of business, one of the first things you’ll probably encounter in your first year is that things rarely go as planned. While you can do a lot to set up your business carefully, be prepared for the unexpected.
You may find you need to diversify your product line or that your true niche is something else. Maybe demand for your product goes through the roof and you can’t cope or you find your suppliers aren’t as reliable as you’d hoped.
Predicting shifts in market forces and business strategy isn’t easy, but you can prepare by having a plan and sufficient cash reserves to allow adjustments to your year one strategy. Many of us put off writing a business plan until we need to secure financing. However, a well-prepared plan that is revised often will help you steer your business on its course, and help you navigate bumps in the road. Try to think of your business plan as a living, breathing project, not a one-time term paper.
Part of your planning strategy should focus on maintaining cash flow and having reserves. The following tips from SCORE offer good advice for building a six month cash reserve:
- Add up all your monthly expenses, so you know what your true personal expenses are.
- Still in a day job? Set aside five percent of your net pay each paycheck and build savings.
- Sound like too much? Start with a goal of setting aside $100 week equals $5,200 a year, a nice cushion.
- As an entrepreneur, you want to be sure that whenever you take a cash draw from the company, you set aside money to pay taxes. Don’t be surprised by a nasty tax bill.
- Start now. The most important thing is to create a habit of saving each week.
Year 2 – Reflect On and Advocate Your Business
At the end of year one, reflect back on your first year in business – your successes, failures and shortcomings. What would you have done differently?
Year two is also the time to work ON your business, as opposed to working IN it. Becoming a fulfilled and successful business owner involves positioning yourself as a true advocate for your business, not just a salesperson. Some of the most successful brands in the world are where they are today because the entrepreneur behind the brand is out front advocating its products, its successes, and its core values – think Richard Branson or Steve Jobs.
Becoming an advocate isn’t difficult, but it involves relinquishing control of some day-to-day business operations that you have gotten used to as a startup.
Year 3 – Grow your Formula
Year three is often when small business owners really feel they’ve found a formula and a niche that works. Business fluctuations still happen, but by now you likely have a good view of your financial projections, so you can better prepare for market and seasonal fluctuations.
If your niche is working for you, keep focused and stay true to it. Stay customer-centric, look for opportunities to grow in that niche, and refine your business and marketing strategy to stay ahead of the curve.
Original post from https://www.sba.gov/blogs/early-years-entrepreneurship-step-step-approach-surviving-and-thriving (no longer available)
About the Author: Caron Beesley is a small business owner, marketing communications consultant, and a contributor to SBA.gov.