If you’re starting a new business (or have already started), then you might have already heard about the most horrifying business news. – 90% of Businesses Fail Within The First Year!
Granted that a 10% chance of surviving in the first year of business does not feel great, but that’s not a reason to just sit back and leave everything to fate.
As an business owner, I know about business failure pretty damn well.
I have started many businesses and closed them. At the same time, I have also been fortunate enough to succeed a few times as well.
After starting 3 successful businesses and (closing 5 before that), I have learned many important lessons, which I think every business owner should know.
Now, there are plenty of things a business owner needs to consider and my goal with this article is not list all of them, but rather point out the 5 most important tips to avoid business failure in the first year.
5 Tips to Avoid Business Failure in the First Year
Before we jump onto the tips, here’s some motivation:
While 90% of businesses do fail in the first year, but if you can survive that first year and keep your momentum, then there are high chances of your business to succeed.
That being said, let’s dive right in!
1 – Make a Longer Runway
It’s common among first-time entrepreneurs to give their businesses one test year to see what happens. And when things don’t work out the way they expected or wanted it to, they usually decide to close the shop.
This is the first mistake business owners or entrepreneurs make.
You see, your business might need more than a year to become profitable. Therefore, it’s to plan for and give at least 18-24 months to your new business before you decide to close the shop.
2 – Create a Business Plan
Self-funded business owners oftentimes skip the part of creating a business plan just because they don’t need a loan from a bank or an investor.
But without a business plan, you won’t be able to measure how close or far you are to reaching your goals.
Moreover, the process of writing a detailed business plan can help you really hone your vision for the new business.
For instance, it can help you deeply understand what problem you’re trying to solve, whose lives you’re going to change or improve, and what is the timeframe for the launch.
The best part is, you don’t actually need to write a 50 or 100-page business plan. It should be detailed enough to determine whether or not you have the right business model and a good market.
3 – Always Focus on The Customer
According to a report by Fortune Magazine, a majority of startups fail because they make products nobody actually wants.
When you’re just starting out, your goal should never be making an awesome product, but to help the majority of people with your product.
So, instead of creating the “next big thing”, focus on the needs of your target customers and make changes based on their feedback.
You see, business is simple. You build something that people either want or need and the sales will follow.
4 – Keep Expenses Low
82% of businesses fail due to cash flow problems. That’s right. Let that fact sulk in for a second.
So, it makes sense to keep your business expenses as low as possible until reach the profitability point.
One way to avoid business expenses is by using freelancers and contractors whenever a need arises. In fact, I would go ahead and suggest not to rent out an office space until you absolutely need it.
If you rent an office space, on the other hand, buy secondhand furniture to save some money, even if your expenses are already under the budget.
5 – Network, Network, and Network!
The more people you know, the better. And this especially applies to the business world.
You see, anyone could be your next customer, mentor, or a potential partner. Therefore, you should always be reaching out and meeting new people. The more you reach out to professionals in your field, the more opportunities will come your way.
Lastly, always remember the golden rule of networking – the more you give, the more people will want to give something back in return.
Launching a new business is, without any doubt, a risky endeavor. But if you’re not afraid to take the plunge and apply these 5 tips in your business, then there is no reason for your business to fail, not just in its first year but ever.
Sandeep has more than 2 decades of experience in creating world-class teams and driving innovation through cutting edge products and mobile app development solutions. He is passionate about creating new technology solutions and delivering “Great Customer Experience” by evangelizing “Ubiquitous Mobility”. Being the CEO of Credencys – Mobile App Development Services Company, Sandeep helps clients to bridge the execution gap with services including Consulting, Design & Architecture, Product strategy, software development, DevOps, Managed Services. With a motto of ‘Go Digital, Sandeep delivers an Extraordinary Customer Experience to its every client. Connect with Sandeep at firstname.lastname@example.org.