Many people dream of being their own boss. However, 66% of new small business startups fail within the first four years, according to the small Business Administration’s Office of Advocacy.
If you are thinking of starting a new business, careful planning before you jump in will help you beat the odds and make your new business a success.
Make A Business Plan
Too many entrepreneurs fail to plan when they start a new business. A detailed written business plan is an essential first step. Research the market and its size. Determine whether there is a demand for the product or service. Consider the advertising and marketing budget required to acquire customers. Accurately estimate the costs and pricing of the product or service. Outline the steps necessary to get from the idea to the marketplace.
A thorough business plan will address all these issues and allow you to realistically determine the risks and potential rewards of starting a new business. It will also force you to examine how much capital will be required. Most new business failures are due to under-capitalization.
Consult With Experts
Many entrepreneurs don’t talk to consultants or other business owners because they fear having their ideas stolen. This often keeps them from seeking and getting the advice they need to start a new business successfully. Seasoned business owners in similar businesses and experienced consultants can help you avoid common pitfalls and perhaps raise questions you haven’t considered. They can also become part of your network to help you along the way once you start your new business. The local chamber of commerce, trade organizations, and the SBA’s small business development center in your area are good sources for finding the experts you need.
Find Reliable Advisors
Industry experts, a good small business CPA and and a business attorney should be important members of your team. You should also develop a relationship with your banker. These professionals can help you be aware of market changes, financial and tax issues, business entity and liability issues. They may also be able to help you find and vet potential investors, should you need them.
Establish a Relationship With Your Core Customers
Sometimes entrepreneurs focus too much on the service, product or process of starting a new business and not enough on the customer. Talk to the people your new business is aimed at. Be sure you understand their needs and expectations. Analyze how your product or service will satisfy those requirements better than what is already available to them. What you learn from potential buyers can help you tweak your ideas for maximum satisfaction. Once you’ve successfully addressed the needs of your core customers, you can look for ways to adapt and modify your new business for a wider market.
Be Ready To React Quickly To Market Changes
Every market has fluctuations. The successful new business owner recognizes this fact from the beginning. Build in contingent plans to address these fluctuations. New technologies, processes and product improvements come along every day. Keep current with industry news that might affect your new business. Most entrepreneurs will tell you that the business they actually run is very different than what they thought it would be when they began. A business that can’t quickly adapt to these inevitable changes is likely to be one of the 66% that fail.
