Get All Access for $5/mo

3 Lessons to Survive Your First Year in Business A business's first year is critical -- and challenging. Here's what you need to know.

By Ross Buhrdorf Edited by Amanda Breen

Opinions expressed by Entrepreneur contributors are their own.

You have a great idea and the ambition — now what? As you start your own business, there are some things every entrepreneur needs to know to make it through that critical first year successfully. In my more than 30 years as a tech leader, entrepreneur and C-level corporate executive in public and private companies, here are three of the biggest lessons I've learned.

1. Forget about perfection and focus on finding your customers

The number one reason entrepreneurs fail is that they don't have customers who want to buy their product or service. With that in mind, your first year should be about finding communities of people who want to buy what you're selling — or even just part of what you're selling.

As you do, don't assume that you need to create the perfect product or service before you locate your customer base. That will only hinder your momentum. Banish negative thinking along the lines of, "If I just get this piece right, then…" and instead remain laser-focused on the bigger question: "Am I able to find or generate enough interest to keep moving forward with my idea?"

One of the best ways to identify your base can be through paid channels like Google that maximize your exposure to consumers. Consider how businesses would open in malls because that's where the foot traffic was, but today, all of that traffic is online. Once you locate your customers, you are in a strong starting position and you can turn to fine-tuning from there.

Related: The Complete, 12-Step Guide to Starting a Business

2. Control your cash

The other main reason that companies fail early on is that they run out of money, so managing your monthly cash flow and expenses is crucial during this window. Of course, the two go hand-in-hand: You want to be able to survive long enough to discover customers.

To set yourself up for viability, adopt a highly conservative approach. Start by implementing a good cash-flow management system to track the money going in and out and make sure you understand the difference between cash flow and profit. For example, even if you sell lots of your product to customers, that doesn't necessarily mean you can pay your bills. If you sell, say, $50,000 worth of products on credit with 60-day terms, yet you ordered $35,000 worth of supplies to make those products and you have to pay your suppliers within 30 days — on top of rent and payroll — the math quickly becomes complicated, and you may not be able to keep the lights on.

Part of being conservative is also making calculated decisions — meaning, don't overhire talent until you determine how you're going to locate your customer base, make money and be attractive to investors. Keeping a sharp eye on all of this is essential to opening up growth opportunities.

Related: How to Conquer Your Fear of Starting a Business

3. Stay calm and take the next right step

During the first year of founding a new company, there is always some reason to panic or have an existential crisis. Maybe your new product turns out not to have the take rate you expected, or someone who you feel is critical to the team quits, or you miss your revenue numbers because of an unexpected expense, or unforeseen competition enters the market — the list can feel endless.

All of these scenarios are serious, but rest assured that they are typical and can be navigated gracefully. The solution is often just to stay calm (I personally find that meditation helps me avoid becoming wound up and stay attuned to what's going on around me), listen to your instincts and do the next right thing. If you do that, the path forward will start to reveal itself.

By deploying these tactics, entrepreneurs can navigate some of the more common challenges that will surely arise during the first — and arguably the toughest — year while staying focused on what matters most for success.

Related: How to Start a Business Online

Ross Buhrdorf

CEO of ZenBusiness, Inc.

Ross Buhrdorf is the founder and CEO of ZenBusiness PBC. He has over 30 years of experience as an entrepreneur, technology leader, C-level executive, angel investor and board member, and he's helped transform the way consumers interact with technology.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Leadership

7 Telltale Signs of a Weak Leader

Whether a bully or a people pleaser who can't tell hard truths, poor leadership takes many forms.

Living

70% of Small Business Owners Experience Monthly Burnout. Follow These 3 Rules to Avoid the Same Fate.

Here are three guidelines to help entrepreneurs achieve balance, growth and success in both their professional and personal endeavors.

Growing a Business

How to Build, Grow and Make Money With Ecommerce

To grow your online business, you need to develop a strategy and invest your time wisely. These actionable tips can attract customers and increase online revenue.

Franchise

Kick-Start Your Small Business With These Cost Effective Strategies

Starting a small business is an exciting adventure, brimming with both opportunities and challenges. A key to success is effectively managing costs from the outset.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.