The amount of businesses that cannot even survive for a single year is alarming. Depending on what statistics you look at, anywhere from 4% to 25% of businesses fail in their first year of business. Sustaining operation for a single year doesn’t seem like a long time, so how can one ensure the business they are planning to launch at least survives for a year and that they give their business the greatest chance to succeed?
In order to increase your chances of success there are three key things you need.
- An abundance of available cash to carry you through any tough times getting your business started. As a general rule of thumb I would recommend you have cash reserves or access to credit that is 3 times the amount of cash you think you will need.
- If you can keep your capital investments to a minimum until you are profitable this will dramatically increase your chances of being successful. This will free up cash to prolong your operations even if sales are coming in slower than you expected.
- Having a marketing strategy and marketing plan is critical to success because with a strategy and plan that has been written down, you will be much more likely to successfully attract clients than if you have no strategy or plan. If you don’t have a marketing plan, get started on one!
Take a look at your largest expenses and see if there is a low cost or even free alternative that can reduce your capital investments or your expenses. For instance, when I started my business I choose to use a free, easy-to-use accounting software program instead of investing money in a program like Quick Books, Sage Peach Tree or Simply Accounting. I have a decent knowledge of accounting and putting off a large spend on software helped reduce my expenses as I did not need to pay an accountant to do my books or file my tax return.
When you have little or no revenue, having a low cost marketing plan that will expand your customer base can be critical to success. Your plan should include your overall marketing strategy as well as specific tactics for what your products and/or services will be, how you will promote your products/services, price your products/services and distribute your products/services.
When writing your plan, be sure to keep in mind how you can keep expenses low. What marketing activities can you do for free? Can you somehow use social media like Facebook, Google+, YouTube or Linkedin or other free online tools to successfully marketing your business? How can you save money on the marketing you are planning on doing?
Whatever you decide to do it is critical that you at least have a strategy and a plan. Customers and revenue never just appear. They take thoughtful planning, strategic thinking and hard work.
Guest Author Chris R. Keller runs Profitworks Small Business Services which helps small businesses expand their customer base through marketing & sales strategy, planning and execution. Visit Profitworks for free information, templates, and low cost software.