Don't Get Stalled at Startup
Follow these 8 simple rules for ensuring your startup will be around for the long run.
If you're like most new or wannabe business owners, you want to hit a home run right from the start. And who can blame you? You're probably investing the majority of your life savings in your business, so you need it to succeed, right?
Here are eight guidelines you'll want to follow to help you make sure the business you're starting or buying has a fighting chance to survive--for both the short and long term:
- Find something you'll enjoy day-to-day.
You're going to be working a lot of hours each week, most weeks of the year, without much time off at the start. It's important that you enjoy both what your company does and what running the company entails.
- Don't start if you can't ensure a solid profit margin.
So often people try to get by on the slimmest of margins and wonder why they don't enjoy owning their business for very long. Make sure your business will have a solid profit margin, which is vital to long-term success.
- If it's your first business, think about buying an existing business or a franchise.
You'll already have enough to learn about running your own business without having to invent everything yourself. Your first business will always be the toughest because you have so much to learn. An existing business or franchise provides a shortcut through much of that process.
- Buy into a growing industry and market.
Go to your industry association's website, and make sure your potential competitors aren't all going out of business. Then check into the growth rate of the city that'll provide your customer base. Remember, you're building your business for the long term, so think about how your company will evolve over a 10-year period. You want to have a good sense that there'll still be a demand for your product or service 10 years out.
- Marketing and selling to new customers is expensive. Demand repeat business.
Whatever you sell, you need to make sure that once you get customers and serve them well, they'll come back. Products and services like haircuts, vitamins, bread and accounting advice are things people need again and again. Repeat business is where the profit is in just about every venture. Make sure you have it.
- Keep recurring costs to a minimum.
The biggest destroyers of new businesses are the recurring costs, such as leases on cars, equipment and so on. If you can buy something secondhand or at auction for less money--and pay cash for it--do it. You can upgrade later. There'll be times when you're first starting out that you'll have slow cashflow. Don't cripple yourself by committing to expenses years in advance.
- Get good advice.
A good accountant, attorney, business coach or person in any other specific area where you lack skills or expertise is worth your time and money. Work with the best and learn from these mentors. Don't just get them to do a job for you--learn why they do what they do so you gain knowledge in their field.
- Be prepared to work really hard for the first year or two.
Too many new business owners think that all they need to do is hang out the shingle to get business to come their way. Not true! You have to work at it. Strong sales, effective marketing and nonstop networking all are vital to building a solid cashflow and profit. At times, you'll probably feel like it's too hard and you'll want to give up, but if you stick with it, things will get easier.
Trying to ensure startup success is far from an exact science. The most important advice I can give you is to keep learning. New knowledge is vital to the success of any new venture you might choose to take on.