Did you know that half of all small businesses are started at home? What’s more, two-thirds are run solely by their founder.
Unfortunately, about 20 percent of all startup companies will fail within the first year.
Why do so many startups fail when they’re barely out of the gate? According to a study reported by Investopedia, there are six possible reasons:
- Insufficient market research
- Lack of a cohesive business plan
- Too little funding
- Bad location or lack of online presence
- Not being flexible or agile enough
- Scaling too fast with no plan for managing growth
You can be one of the success stories instead of a statistic by building a firm foundation for success.
Our 7-Point Success Plan for New Businesses
Every successful business begins with a marketable product or service. Ideally, it should be something that you already know or can build passion and enthusiasm behind.
Whether you’re looking to turn your side hustle into a viable business, you have a product that you think is a game-changer, or you’re buying a franchise, find a niche that’s under-served and bankable.
Next, conduct your market research to identify your ideal customer and gear your branding efforts toward reaching that target audience.
Take a look at this infographic to find out more about market research tools you can use.
Conducting research means asking yourself these questions:
- Who is my ideal audience?
- What are their pain points?
- How can I address these issues?
- What sets me apart from the competition?
Once you have that set and you’ve done your due diligence, you’re ready to create a blueprint for success and long-term, manageable growth.
Create a Viable Business Plan
A formal, written business plan is mandatory if you’re looking for investors or a business loan.
Even if you don’t need funding, creating an actionable business plan is essential for success. It provides a solid framework and timeline for linear, forward motion.
What are your financial goals and plans for expansion? Where do you see your company in six months, or a year, or five years from now, and how do you plan to get there?
These are important considerations, and knowing the answers will keep you on track. This will be especially important when you get discouraged and feel like giving up.
Traditionally, business plans include:
- Company mission and vision
- Company description
- Market analysis
- Company organization and management
- Services or product line
- Cost and profit projections
- Marketing strategy
When you’re launching a business that’s relatively simple or you want to launch quickly, you could opt for what’s called a Lean Startup Plan. This involves outlining:
- Key connections, such as suppliers, partners, and funding
- Key activities, such as marketing, technology, and procurement
- Key resources, such as business assets, investors, and other financial considerations
- Value proposition
- Customer segments and marketing channels
- Cost structure and revenue streams
Above all, every step of your plan should be both actionable and measurable.
Whichever route you choose, just make sure to be thorough and realistic.
If you need a little help putting your business plan together, Hubspot has a detailed step-by-step guide and a free template available.
Do Your Legal and Financial Research
Most businesses focus on finding investors or making sales, and rightly so. What else are you in business for if not to make a profit?
However, many are surprised by the amount of necessary expenses like permits, licensing, and taxes.
Conduct your research about the best corporate structure for your type of business, because each could have different risks, taxes, and reporting obligations.
For example, it will cost a minimal filing fee to register as a sole proprietor, but there may be unexpected liabilities incurred.
Depending on your location, corporations must meet certain guidelines before forming, such as creating a board and setting meeting dates and deadlines.
You may also need a business license in your city or state. Some businesses require professional licensing or certifications.
However, online-only businesses have a little more flexibility in these matters.
However, all of these factors have tax consequences and fees attached. Make sure to do your research so that you can meet any legal and regulatory compliance.
It’s also essential to speak to a business lawyer and an accountant before starting a business. Many will offer a free or low-cost initial consultation, while others charge a flat fee for their services.
This is an expense you can’t afford to skip, so put it in your budget!
Start Brand Building Before You Launch
Have you ever anticipated an event or new product and couldn’t wait for it to come out? This is the charm of building enthusiasm.
We see this most often in the sports and entertainment industries. Think about things like “Must-See TV” and the build-up to a major concert or championship game.
Here are some things you can do to create buzz.
- Create a logo and color scheme that is memorable and easy to identify. Think of the Nike swoosh or Olympic Rings and how recognizable they are. Doritos was able to launch an effective marketing campaign using just a triangle and the color of their packaging.
- Start building interest in your brand well ahead of your launch through email campaigns, a landing page, or even fliers. Print business cards with your logo and pass them out to everyone. Talk up your launch at every opportunity. Enthusiasm is contagious.
- Reach out to your audience and engage them with targeted social media marketing. Consider paid ads on Facebook, Twitter, and Instagram that will build interest and anticipation. Countdowns are effective, as are teasers.
- Never miss an opportunity to network. An old mentor of mine was the VP of sales for a rather large corporation. He once told me that every person you meet is a potential business contact. Always remember their names and faces, and get their information. This one hint has paid dividends for me on numerous occasions.
You may not have the budget of FIFA or Disney, but you can use some of their marketing concepts and approach to your benefit.
Determine Your Staffing Needs
This is a time when budgets are tight and you’re just building your brand, so you cannot afford to miscalculate the number of people you need in your company and the resources you have to pay them.
Consider whether you need a full staff during this time.
Perhaps you’re able to outsource core functions like accounting and web design to freelancers.
Additionally, you can usually handle many office tasks yourself, such as answering phones and setting appointments.
During the first year of their home improvement company, my friend’s husband and sons did the work and she was the sole member of their office staff. She was later able to parlay that experience into a freelancing career in web design, where she wears all the hats for now.
You could also opt for independent contractors to handle some duties.
This will give you the advantage of working with experienced professionals while cutting expenses like workers compensation insurance, social security, and employee benefits until such a time when you have enough business to hire permanent help.
Establish Priorities for Equipment Purchases
It’s tempting to run out and buy the latest and best apps, phones, and computers, but is all that equipment really necessary?
If it is, would it be more cost-effective for you to lease some items rather than purchasing them?
Establish priorities when acquiring tools, software, and equipment. Items like phone lines and computers are essential, but even these can be leased.
Make it a point to evaluate your short- and long-term needs and balance those against how often these items will be used and your available equipment budget versus projected revenues.
You should always have some cash on hand for small incidentals.
However, you can stretch a tight budget through leasing office and other equipment rather than buying it outright. In that case, you won’t be responsible for repairs, serving, and depreciation.
You’re also more likely to get the most current products available, and you can trade up when you need to upgrade.
Because assets are important for company valuation, taxes, and obtaining loans, it’s essential to track them and keep them in good repair.
Vehicles and some tech will depreciate over time, so tracking is necessary during tax time.
An asset management software will help you keep tabs on tools and equipment.
As your business grows and more employees handle equipment, good tracking habits will show what pieces are in high demand while making maintenance and replacements easier.
Make Customer Satisfaction a Priority From the Start
If you’ve ever held a job, you’ve heard the saying “The customer is always right.”
Although no one should allow anyone to abuse or take advantage of them, putting customer satisfaction as a priority is essential to fostering loyalty and keeping your customer retention rates high.
That translates to repeat business and an abundance of social proof.
How do you ensure customer satisfaction?
Nothing is foolproof, but these five tips will create a climate that lets customers know they’re important.
- Collect customer feedback through email, surveys, and other formats. Make sure to request it at every opportunity
- Act on the feedback as soon as possible. That goes double for any negative reviews or comments on digital platforms. Address these immediately and publicly so that other potential customers can see that you put customer satisfaction first.
- Use the feedback that you receive to improve your product or services.
- Follow up with customers after each contact, visit, or sale. Make it a priority to let customers know when you’ve made improvement due to a suggestion from them.
- Offer incentives for customer loyalty, like discounts and premium services
You can find more tips for ensuring customer satisfaction in a nifty infographic here.
Keep in mind that happy employees are better able to serve customers, and treat your staff and associates like they’re people of value.
Be Prepared for Sustainable Growth
No one starts a business with an eye on stagnation. On the flip side, many people are unprepared when their product goes viral and they’re buried in business.
Your goal should be to ignite stable, sustainable growth and to put processes in place to manage any exponential, unexpected growth.
How to make sure a process is scalable?
Acquiring and deploying technology is one way. For example, inventory management systems and cloud storage can be scaled up or down quickly, as needed, and they are often billed by usage.
Having enough space at your place of business for added employees or equipment is another.
It also helps to have a growth mindset, which will set the tone for your corporate culture.
What does a growth-minded culture look like? It means:
- Taking responsibility for your mistakes
- Not focusing on “failures”, but perceiving them as learning opportunities
- Sharing the credit when it’s due
- Becoming an authority in your field
- Focusing on building your brand instead of worrying about money — if the company is solid, the money will come
- Expressing gratitude
- Never losing sight of your mission
With a growth mindset and all prerequisites for scaling in place, you will be able to enjoy your success without any missteps in your processes.
Success is not guaranteed. As a new business owner, you’re going to make some mistakes.
Nevertheless, a solid plan and the right mindset will minimize your risks and increase your chances of beating the odds.
Our goal is to provide you with the blueprint for a successful launch. Short-term planning leads to the long-term viability and sustainable growth over time.
By following our guidelines, your business will be favorably situated to fulfill your mission and reach your goals.
What are some of the challenges and triumphs you’ve faced as a startup? Tell us more about it in the comments.
This is a guest post written by Heather Redding.
Heather Redding is a part-time assistant manager and writer based in Aurora, Illinois. She is also an avid reader and a tech enthusiast. When Heather is not working or writing, she enjoys her Kindle library with a hot cup of coffee. Reach out to her on Twitter.
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