|Avoid These Three Mistakes
if you're starting a business.
According to the Small Business Administration, a third of small businesses fail within the first two years. Over half fail in the first five years. So if you’re thinking about starting a small business, it pays to take an honest look at yourself, your business plan, and the marketplace before you jump in.
You can increase the odds that your business will survive by avoiding the following three mistakes.
Mistake # 1: Not enough cash. If you’re just starting out, it’s a good idea to accumulate as mush cash as you can. Your cash reserve should be about three times your estimated need. All businesses face seasonal slow downs, when the sales aren’t what you planned and revenues are slow to trickle in. Also, unforeseen expenses such as insurance, wages, rent, advertising, taxes can stop you in your tracks before you even get traction, and in many cases will shut you down before you get started. Having extra cash on hand can make the difference between surviving and being a statistic as another failed new business. A reserve fund provides an extra bit of cushion to keep the business operating as you work toward the next sales goal.
Mistake # 2: Poor planning. Building a business is like building a house. You need a foundation, a clear set of goals, and an implementation strategy. Where do you want to be a year from now and beyond? Developing a sound business plan means doing solid research. It means understanding the marketplace, knowing what sets your product apart from the rest, and getting a handle on the costs to implement your business plan. An idea is not a business plan. You need to flesh out the idea and get to specifics before moving forward. One of our favorite acronyms - from our college days - that will help remind you of the correct process is, PPPPP. Which simply means: Proper Planning
Prevents Poor Performance.
Mistake # 3: Inflexibility. Once you’ve developed your business plan, be willing to adapt it to changing conditions. More than a few businesses have started with a great business model, but failed to modify that model when market conditions evolved. If your customers or competitors change (and they will over time), don’t be afraid to change with them. Always remember, a person or business that won't be flexible will likely snap, break, or fail. And when something snaps, breaks, or fails, one usually throws it away, tries to fix it, or closes its doors.
So if you're thinking about starting a business, connect with the best today! Click here to contact us or visit our Documents and Forms page for hundreds of forms for almost any situation.