According to the U.S. Small Business Administration, small businesses account for 99.9 percent of all companies in the nation. Although that statistic is nothing short of impressive, it is accompanied by something much less positive. Namely, as many as half of all those businesses fail within the first year and 95 percent of them cease operations within the first five. That means that out of 100 small companies that were established in 2014, only about five should be expected to exist today.
Many of the issues facilitating entrepreneurial failure have very little to do with the businessman or woman in question. For instance, the economy and market competition often make it impossible for organizations to thrive. And while business owners will seldom have any power over such predicaments, they can increase the odds of success by properly launching their venture.
Create Three Plans
Vlad Rigenco, who has spent years operating in the real estate market in Toronto and working with clients from all sectors, has a few important tips regarding company launches. According to him, the most important one is to form three essential plans. Each of those would represent a plan of operations pertaining to a different time frame. The first is meant to focus on the initial 12 months following the establishment of the company. The next one will include those 12 months and another four years to represent a five-year plan that is subject to change. Finally, the third plan is the most overlooked one as it deals with the long-term timeline spreading anywhere from the next 10 to 20 or more years.
Build Your Team First
One of the leading reasons why small businesses fail is the lack of a formidable support team. Many entrepreneurs lack the resources to hire others until their project starts bringing in some revenues and establishes positive cash flows. This makes it very difficult to hire employees who share the same vision prior to the start-up’s launch. It does not mean, however, that the business owner cannot begin looking for candidates who would be a good fit. Doing so early on will save them a lot of time and effort in case sales start rising rapidly.
Become a Financing Expert
Besides skills in business administration, Vlad Rigenco stresses the importance of specializing in financing. This does not mean that one has to attend formal training or education to become a certified finance guru. On the contrary, they simply need to master everything related to their company’s funding. Starting a sole proprietorship, for example, will require a much different approach to gathering capital than when starting a partnership, LLC, or a corporation.
Start Marketing Immediately
Since funds are usually limited during the start-up stages, all costs should be analyzed based on their importance. Choosing to pay for things like marketing and PR campaigns, per se, will probably be much more important than spending any funds on corporate memberships and other overhead fees. The reason why marketing is so significant boils down to customer awareness that perpetuates sale conversions. If the buyers are unaware of the products or services offered by the new entity in the market, there are literally no chances of selling anything. So, marketing to a wide audience and then establishing more specialized, interest-based targeting is the right way to start the sales cycle.
Establish a Purpose Beyond Profits
Vlad Rigenco reminds that there is one aspect of having a profitable venture that even experienced entrepreneurs tend to ignore. The purpose of a company should never be limited to profit-based goals. While it remains expected and understood that companies are in the business of making money, customers need to see more ambitious objectives. This is where a basic triple bottom line can come in very handy. The triple bottom line originates from accounting frameworks and advocates for social, environmental, and financial success. In order to have a prosperous launch of a start-up, all three parts need to be made clear to potential buyers by pledging to help the community, preserve nature and sustainability, and, lastly, operate in a profitable manner.