Starting a business is an exciting adventure, but sadly many start-ups end up failing within the first few years. A business can fail for a couple of reasons. Some of them include finances, competition, product quality and lack of customers among many others. This article highlights eight key factors you should take into account to boost the survival of your first start up.
Products, Market, Customers and Competition
Don’t start a business until you have clearly defined these four factors. Research well on each of these factors and this will save you from failing within the first year in business. Don’t explore just one factor and overlook the rest because this will cause you to fail. For instance, you can have a very good product, but if you don’t research the market prior to your launch, you might end up making no sales.
Start-up Costs
How much does it cost to start a business? Well, it depends on the nature of the business and the size. But generally, you will need money for permits, licenses and other legal requirements, business location, office furniture, stock, marketing, insurance, salaries and utilities. Evaluate your start-up costs accurately to avoid getting stuck even before you launch.
Location
Choosing a good business location is essential to the success of your start up. Firstly, you should choose a location that will not strain your finances. Don’t go for a building that is so expensive when you are barely making profits. Secondly, ensure that the location is convenient for your customers, employees and suppliers.
Cash Flow
You can easily close your business due to poor cash flow. When a business is new, your spending is more likely to be higher than your income. This can make it hard to pay for supplies and other expenses. While it is possible for a business to hit the sales target within the first months, you should have a plan on how expenses will be handled if this doesn’t happen. Consider having an emergency fund for your business to cater for cash flow issues that may arise when the business is young and also to cover other unexpected expenses.
Marketing
For a start-up to thrive in today’s competitive world, you have to do a lot of marketing. You can start by creating a good website, doing SEO, establishing a social media presence, collecting some emails for a newsletter and investing in some offline marketing as well. Doing it right means knowing who you are targeting, identifying the best channels to reach them, and crafting compelling messages.
Outsourcing and Hiring
When a business is still young and your finances are limited, don’t outsource the tasks you can complete on your own or hire too many employees. Doing so will add to your expenses and this can cause your business to strain financially. Start solo if the business does not entail much and hire employees as sales grow and tasks increase. The business will tell you the right time to hire more people or outsource. For instance, if you are not meeting the demand, this is a clear sign that you need someone to help in sourcing or production. Also, if you are spending too much time doing marketing and less time overseeing the key business operations, this is a clear sign that you need to outsource your marketing needs.
Loans
Start-up loans can be used to cover the initial cost of starting a business, cash flow issues, expansion and equipment purchase among many others. While loans are good, you should handle them carefully. For instance, you should check the interest rates and payment terms well before taking a loan. Ensure that you have the means to pay back the loan before you sign the final deal. Also, don’t take a loan just because you qualify for one.
Career and Personal Growth
The success of your business is also dependent on your qualifications, skills and traits. This makes personal and career growth another important consideration. To grow as a business person, consider signing up for courses in business management, financial planning, productivity, communication and people management among others. Today, taking a course is so easy since most learning institutions offer online classes. A good example is Suffolk University Online where you can earn an MBA.
Finally, as your business grows, plan your expansions carefully. Before you introduce a new product or open a new store, ensure that you have the resources to handle that kind of expansion. And don’t forget to look into Ecommerce. By using an ecommerce platform for your business, you boost your reach since there are no geographical limitations.
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