If you’re starting your own company, there’s no guarantee that your business will succeed. About 50% of small businesses fail in the first two years. The two main causes for the failure of businesses are the absence of a solid business plan and insufficient capital.
Before you get into debt to fund your business, you must create a solid business plan that outlines your strategies for how you can be successful and thrive during those initial few years.
Here are some concepts to take note of from businesses that have been successful for five years or more and what they share in common.
YOUR IDEA:
1. All successful businesses begin by generating an initial idea. What makes your idea stand apart from others? How can you tell that you’ve got a solid idea?
Does your concept solve the problem you are facing?
Does your idea meet an actual need or desire? (what the people desire or require are two distinct things)
Does your idea provide an opportunity?
The most successful companies have come up with a solution to solve issues (real as well as perceived) or provide goods or solutions that provide pleasure for their customers. Practical ideas will create an ongoing demand for products or services in the market you intend to target.
YOUR MARKET:
2. If you have the ability to answer “yes” to the questions below, then your chances of survival are higher than those of the average.
Are there markets that are ready to sell your service or product? (It’s simpler to satisfy an existing need than to attempt to create an entirely new market)
Are your services or products cost-effective for your intended market? (it isn’t important how great your services or products are, but if potential customers aren’t able to be able to afford them, they’ll never sell)
Are your goods or services worth the investment of your customers? (If they’re interested but don’t think the worth of it, they will not purchase it.)
YOUR KNOWLEDGE AND ABILITY:
Have you got the experience and ability to sell the goods and services you’d like to offer? If not, Do you have any employees or partners who can help you with the areas you’re not equipped to perform or do not like doing? Are you able to provide enough manpower?
Have you got a regular supply of your product? Or do you have the capability to offer the service that you offer on a continuous, long-term basis to the target market?
Do you have a USP (Unique selling point) that can help you keep your edge?
Have you got a brand that accurately represents your business and products and is consistent across your business, making it distinctive and differentiating you from your competitors?
It is essential to create an effective Business Plan. The concept is that your plan for the business should serve as your constant roadmap for your business, which can be modified and re-written as you go to ensure that you know where you are and where you’re heading. A Business Plan isn’t only “my idea is excellent. Therefore I should get financing”; it doesn’t make sense to investors or banks.
Be sure to use Your Business Plan, don’t waste time writing it only to file the plan away inside a filing cabinet. The business plan you create will keep you on track to progress and success and help ensure that you are on the right track to your objectives.
The next step is to make sure you have enough funds. Being able to fund enough money to ensure your business’s survival is essential to the success of your company. Many entrepreneurs in small businesses are prone to underestimate the amount of capital they’ll require and fail to account for cash flow. The initial months of your company will likely be financially strapped as you grow and expand your market. It is important to make sure you have enough money to last through the period. Be realistic about your budget and include a cushion to cover unexpected costs.
Alongside the traditional sources of funding like family, banks, investors, etc. Here are some sources you could use for loans or grants.
Small Business Associations in your area
Small Business Development Centers
Economic Development Centers
These sources can generally point you in the right direction, even in the event that they cannot help you directly.
Take a look at other successful businesses that you have studied. What do you enjoy about them? What do you think they’re doing to be successful?
Nobody can be able to do it all on their own; even with the best skills and capabilities, nobody can do everything properly. You are likely to know your strengths and weaknesses. Instead of ignoring them and making them affect your business, seek out a mentor who will provide guidance and support in your weak spots.
If you create a solid business plan that is designed to be successful, then you can build an effective business that you can pass on to future generations and one that other entrepreneurs can take as a reference for their business.