Written by: Kevin Gardner
According to figures published by the Small Business Association (SBA)
, two-thirds of new businesses are still running after two years, and half hit the five-year mark. So, what is it that makes these businesses survive the turbulent first year and (in the case of the 50 percent who go past five years) outlast other new start-ups to become a well-established enterprise? Here are five things you should consider when launching your new company to ensure you reach five years and beyond.
1. Head Back to School
When you start a new business, even in an industry you know well, there’ll be so much you have yet to learn, such as how to be a business owner, industry quirks you’ve not yet been exposed to, or how to work through challenges now you’re on your own. It’s time to go back to school, and while that may mean literally finding courses that can further your knowledge, there’s also a lot to be learned from your peers and industry counterparts. Soak up every bit of advice, every tip, and every learning you can – even if you disagree. You’ll learn far more about getting your hands dirty within your industry this way then any course can show you.
2. Know the Laws
When you’re running your own business, the buck stops with you. True, you can hire a strong legal team, but if you fully understand the laws and regulations of the industry and sector in which you work, you’ll be at a much greater advantage. You’ll not only know what you can’t do but also what you can, which means you’ll be better able to spot opportunities within the rules.
3. Know Yourself
Be realistic with yourself about how committed you are to running the business, how much risk you’re willing to take, how much faith you have in your product or service, and how much you can afford to lose. Once you know this, you can plan your business strategy to take these into account. For example, if your commitment is high and you have the deepest belief your product is excellent, but you’re concerned about cash flow, look for investors well ahead of time. Vice chairman and portfolio manager Christopher Sarofim
believes a company becomes desirable to invest in when it can demonstrate sustainable earnings growth over time, so if you’re going to need external support, start thinking about how you can prove this.
4. Know Your Competition
Unless you know your competition
, you’ll always be on the back foot. You need to know who they are, how successful they are, and what their strengths and weaknesses are. Don’t, however, fall into the trap of getting so hung up on your competition you fail to focus on your own business. Understanding the competition is great, but not to the detriment of your own success. Take a healthy interest, keep up to date with new initiatives they’re implementing and how well these perform, but don’t copy them. If you’re a “me-too” business, you’ll never stand the test of time.
5. Solve a Problem
Don’t start your new business by deciding what you want to sell and then trying to find a market for it. You’ll succeed if you solve a problem that already exists, and ideally a question nobody else has been able to answer. Be the solution to a need, and make sure enough people need it to be viable. There’s no point launching a fantastic product that only five people need, and no point joining thousands of other suppliers, all trying to be the solution to the same problem.
If you’re passionate about an idea and you’re focused on succeeding, get a team on board who feels as strongly about your business as you do. Find out more about how an investment management company can help your venture grow.
Related: Why You Need to Fail Often … to Succeed More