Tips to Overcome Business Failure Statistics; How to Leverage Your Contacts, Network & Consultants
When you set out to start a small business, you are already at a disadvantage. Your investment capital is low, so doing what you want with your business takes a great deal of time, energy and resources. There is a statistic from Entrepreneur that states about 90 percent of small businesses fail in the first year. Over the course of 10 years, the number drops only to 70-80 percent.
I know, these are not promising numbers when you are wide-eyed and ready to enter the world of business. So how do you overcome business failure statistics? My best advice for overcoming the mental challenges associated with higher failure statistics is to take calculated risks. I started my marketing agency when I was 24 years old. I made a commitment to success, hard work and perseverance. But I didn’t realize that I also made a commitment to having to learn from mistakes along the way, which cost me time, money, resources and talent. These challenges are the major issues most business owners face today.
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The great news is that there are tremendous resources for free and some that you will have to pay for at some point. However, the cost of paying for consultants, services or an education outweighs the costs associated with major setbacks. If time is money, then save yourself the costs by investing in it before you have to pay for it. You will either pay for it on the front or pay for it on the back so either way, you are going to pay for it!
In June 2015, I will have owned JSMM for 12 years and my second company, VBM, for almost two years. While the clock keeps ticking away, I’m still reminded of these moments when I wish I would have contacted a mentor, coach or some other type of consultant to get me through the rough patches. This is all about experience, and I only had industry experience, not business experience. To avoid this, keep a large directory of friends, colleagues, etc. to get you through these tough moments and do not let pride get in your way!
Here are some tips to help get your small business on the path to success.
The first step is always the hardest! You need to have some money behind you if you want to be successful. You can either save this money or reach out for a small business loan. One great small business loan resource you can use is Kabbage to expand your business and they can be used for a variety of business expenses. If you are going to get a loan, be wise and set up a repayment plan that you know you can pay back. Small business failure usually has to do with lack of funds or borrowing more than you can pay back. Don’t get into too much debt. Know your limits and don’t finance your business with a credit card. There are many free resources out there regarding banking, payroll, etc. Get this down first because cash flow is key. Make sure you understand your cost per lead, cost per employee, cost per client and profit margins. Keep regular spreadsheets and payroll, invoicing and financial information in your hands daily, weekly, monthly and quarterly so you can plan ahead. Never wait for the last moment or before it’s too late to make cuts. If you need to make cuts to keep your budget in the profit area or at break even until you build cash, do it right away! If you are a woman or minority starting a business, get minority business status so you can take advantage of more free resources.
Keep Overhead Low
Even with capital, you aren’t going to be able to do everything you want to do right away. Keep your overhead as low as possible for as long as possible. You can use your funds on more pressing business needs that way. I recommend working virtually, if possible, and hiring a very small staff. For a while, you have to do some of the grunt work yourself. There are plenty of professional resources available for you to have an office presence without committing to a lease. If you are in an industry where telecommuting is acceptable, then take advantage of it. Not all employees want to commute to an office.
Define Your Business
You need to create a persona for your business that customers can relate to. Create a mission statement and a list of your core values. Capture your small business culture and broadcast it. I highly recommend getting behind a cause. More customers will be willing to buy from you if they know you are practicing social responsibility and care about the community. Inject your business persona throughout your website and your store. Make sure everyone knows who you are right away!
This of course depends on the kind of small business you have created. But networking is always going to be beneficial, whether it’s with clients, customers or business partners. The more you network, the better your reputation. A good reputation is something you cannot buy!
Invest in Marketing
Word of mouth marketing is great, but it is not enough for small business success. You need to divert some of your funds to go towards marketing. I recommend skipping print marketing and joining the digital age. You will spend less money and see better results by utilizing SEO, PR, social media marketing and digital advertising. Once you have a social presence, advertise it everywhere! Customers love to connect with their favorite businesses.
These are only a few of the necessary items you need to start your small business on the path to success. Smart business strategy and careful daily and long-term planning are needed for your venture to pay off.