Starting a new business carries an inherent degree of risk, but statistics show that the odds of survival are definitely in the start-up’s favor. According to the U.S. Small Business Administration, 70 percent of new employer establishments survive the first two years, and 51 percent are still going after five years.
Though no formula guarantees small business success, there are many things an aspiring entrepreneur can do to improve his or her chances of long-term prosperity. Most revolve around planning – something no entrepreneur can do enough of.
The more you know up front, the less likely you are to make the same mistakes that typically doom other new business. And, you’re be better positioned to adjust to unexpected events or trends that can send an otherwise well-run enterprise into a sudden tailspin.
Some key areas that should be thoroughly researched include market demographics and demand for a particular product or service, marketing channels and visibility (i.e., how you’ll reach those prospective buyers), competition and pricing, direct and indirect costs (including overhead items such as rent and insurance), financing availability and repayment requirements, and location issues.
You also need to chart a plan for growth. As noted in the statistics above, a promising start-up doesn’t always sustain its early momentum. It’s one thing to reach a comfort level where everything seems to be firing on all cylinders, but what happens when a new competitor arrives on the scene or costs go up?
Finally, look at your most important asset – YOU! Is operating a small business really what you want to do? And do you have all the skills and resources to do it?
Poor management is a major reason for small business failure, whether it’s keeping the books or leading employees. There are several alternatives for addressing areas in need of improvement – self-education, a partnership, outsourcing, etc. Which one best fits your personality, skill level, and type of business?
And consider how operating a small business will affect your personal relationships. Entrepreneurship is an exciting and rewarding experience, but it requires commitment, objectivity, and balance with other facets of your life. Burnout from success or frustration from setbacks can have the same negative physical and emotional consequences.
To learn more about building your small business, contact Raleigh SCORE. We provide free, confidential business mentoring and training workshops to small business owners. To schedule a free appointment with our experienced counselors, go to http://raleigh.score.org, or call us at 919-856-4739.