You’ve made the leap. You’ve decided to fly solo, pursue your passion, and start your own business – congratulations! Starting this journey can feel both daunting and exciting, but we all agree: the destination is absolutely worth it.
The first five years of business are tough. You’ll learn, make mistakes, hit incredible highs, and question your ideas (often all at the same time). To get through it, you’ll need a strong game plan, and a flexible approach. You should also learn everything you can to start your business right.
If you’re setting out on the first few years of entrepreneurship , these 16 essentials will help you stay true to your business vision and find long-term success.
1. Make a commitment
When you start that startup, it’s very important that you make a commitment to yourself that you are going to stay in business for at least 5 years. The vast majority of businesses that fail do so within the first two or three years.
It’s true that the first two years in business are the hardest, especially for someone who is brand new to owning a business, and who has no experience managing staff or dealing with accounting or bookkeeping. However, these are the years that you will learn the most and glean the most wisdom and knowledge that will pay you back in spades later on. When you set out to build your businesses commit to five to stay alive.
2. Perfect your pitch
Your pitch is crucial – you’ll use it to convince potential investors, sell your idea, and also rally people to support your cause. As a guideline, work on your ‘elevator pitch’: a few quick sentences designed to explain your business within the length of an elevator ride.
Don’t confuse your pitch with a marketing tagline – it doesn’t need to be overly scripted. Simply state the problem your business is trying to solve, and explain your idea. Practice it with friends or family until you’re comfortable, then test and evolve your pitch based on responses you get.
3. Have a long-term plan
One of the biggest mistakes a business owner can make is to think in the short-term. Statistically, the majority of people who succeed in business have long-term goals in mind when they start a new venture.
Don’t open a business because you want instant gratification or because you want to make money in your first or second year because it’s likely not going to happen. In fact, you should be prepared to lose money in your first and second year. The first two years are extremely hard. However, as you enter your third and fourth year, you’ve ironed out most of the bumps and kinks.
4. Take the time to build your business plan
Your business plan guides your managerial decisions as you launch and grow your business: it’s a place to structure your vision, unique value proposition, target market, product and pricing plan, finance strategy, priorities, and sales and marketing plan.
Whether you’re applying for funding, or pitching to investors, your business plan is proof that you’ve put in the hard work to validate your vision – so invest the time to build a solid foundation.
5. Focus on what you do best
Opportunities are abundant, yet the right ones are scarce. If you jump at every opportunity or pursue every idea that pops into your mind (we are a creative bunch, after all), you risk losing focus on your vision – which could cost your business time and money.
Be open to opportunities, but evaluate them thoroughly (perhaps with your mentor), and always go back to your plan. If an opportunity aligns with your business plan and goals, pursue it; if not, say no. Another one will always come along.
6. Establish good credit
The longer you’re in business, the better it is for you to establish credit. Leasing corporations usually look for a three-year history of business in order to offer a leasing plan. That means something as simple as leasing a printer may not even be possible if you haven’t been in business long enough. For example, Chase offers a business line of credit, but you have to be in business for three years. It’s okay to show a history of loss so long as you show creditors that you’re in it for the long haul and fighting to keep the business alive.
7. Plan for success, not failure
Many entrepreneurs set out with failure in mind and not success, which doesn’t even make sense, now does it? When you set your new business goals, set your mind for absolute success and that is where you will end up. There are lots of great ideas that succeed because business owners believe they will, and if a business fails, it doesn’t always mean that the idea wasn’t a good one. It could just mean that it wasn’t baked properly in the first place, or it wasn’t the right time for that particular idea.
8. Don’t equate revenue with profit
There’s a difference between running a business that makes revenue, and running a business that makes profit – and it’s easy to make the mistake of thinking the former equals the latter. Making revenue is one thing. However, after accounting for labor costs, services, office rent, and your own salary, your business could be in the red.
To put your business in a strong position for sustainable, profitable growth, map out your current costs compared to your pricing to understand your net profit margins – a good target is between 15-30%. Armed with this info, you can adjust your pricing and volume strategy, or production costs, to have a healthy profit margin for sustainable growth.
9. Make your finances a priority
One of the main reasons small business owners fail is because they don’t get their finances in check. In fact:
80% of small businesses close their doors because of cashflow problems. – Business Victoria
Set up financial goals for the year with check-in points so you can stay on track. Keep an eye on your cashflow and payment timings (ideally, your incoming revenue should always be more than your outgoing expenses). It’s also important to always have a buffer in place for any unexpected cases.
Gaining control of your finances can be daunting, so seek help whenever you can.
It would also be advisable to think about bringing a freelance financial advisor or manager on board, to manage this important part of your business.
10. Look out for your health
When starting out, it’s easy to burn the candle at both ends – after all, you’re bringing your idea to life. However, the stats don’t lie: entrepreneurial burnout is a real thing, and 30% of all entrepreneurs live with, or experience, depression.
You and your team’s work-life balance is essential to the long-term success of your business. Remember to disconnect, exercise, eat well, and spend time with your loved ones. You (and your business) will benefit in the long run.
11. Don’t be afraid to succeed
Believe it or not, there is such a thing as fear of success, the absolute opposite problem of setting out to fail. Many of us have this fear way down deep and we sabotage our own success subconsciously with a deep seeded fear of success. What will I do if I actually achieve this goal and so much is expected of me? It’s a very real fear. Be honest with yourself if you fall in to this camp and keep your fears in check to make this new businesses venture a success from the start.
12. Go with the flow
Understanding when you need to make a change is very important in any business. For example, if your business might be more robust online, make it an online business. If your business is better in a certain location, change it. Cater to your audience’s needs and be willing to take honest criticism and accept change. Also, be open to new technology and approaches to managing your business, like engaging with a PEO. These types of services can help you outsource your administrative functions giving you the opportunity to focus more on growth and new client acquisition. It’s always scary in the beginning but if you stick it out your business will grow and you will benefit in the long run.
13. Know when to say “no”
You’ll make mistakes – it’s a reality of the game we call business. Whether it’s a co-founder, a product feature, a marketing angle, or your pricing, some things won’t work. You therefore need to make the hard decision on when to pull the plug, or change tactics.
14. Listen first
“Don’t find customers for your products, find products for your customers.” – Seth Godin
If customers do or don’t like your product, you need to know about it. The best companies are those who listen to customers and adapt their product to the customer. Steve Jobs, for example, said the idea for the iPhone originally started with a tablet, and suggested that it took around 5 years to develop the first iPhone.
Look for feedback, and be open to positive and constructive ideas for your business:
- Launch a beta test with a trusted small circle in your target market
- Email your customers after they receive your product, asking for feedback.
- Read and respond to reviews online, either on social media, Google+, or your industry’s review sites.
By listening to feedback, and evolving your product or services, you’ll set your business up to survive and thrive.
15. Bring on trusted mentors, and know when to ask for help
The first year is tough, and that’s why you need to have some trusted mentors on board. Mentors bring value with experience and networking opportunities, and can often serve as a sounding board for ideas or issues.
You can have different mentors for finance, leadership, product development, and so on. You’ll also have mentors for different stages of business – your needs for launching a business are different from growing it, for example.
Finding mentors is easier than you’d think – look in your networks (whether it’s co-working spaces, community events, networking opportunities, or old colleagues), and use your perfected pitch to rally them for your cause.
16. Keep learning, and enjoy the process!
Building your own business is a journey, and you’ll learn new things every day. Enjoy every moment, relish the wins, and take time to reflect on what you’ve learned, as well as what’s next.
Over To You
It’ll take hard work and dedication, but you can build a successful business. The first year is all about setting up solid foundations for the future – stay focused, and you’ll reap the rewards.