If you’re reading this, congrats! You’re probably considering starting a small business. And that’s no easy task. After all, an astonishing 20 percent of small businesses shutter after their first year, while approximately 50 percent fail in their fifth year, according to Bureau of Labor Statistics data. After 10 years, meanwhile, 70 percent are forced to close down.
But don’t avoid following your dream just because it can be difficult to build a business of your own. The risk can be well worth the sacrifices if you’re prepared. That’s why it’s important to do your research and commit to being the best business owner you can be.
At First United Bank & Trust, we want to see you succeed. That’s why we’ve compiled four crucial steps you should take before beginning your business in order to set yourself up for success during those first key months.
1. Save your money wisely.
It’s no surprise that starting a business can cost a lot of money upfront. While every business will have its own expenses associated with getting started (depending on the product or service you’re providing), you can find estimates to help you before you launch.
For example, the U.S. Small Business Administration suggests that most businesses cost between approximately $2,000 to $5,000 to launch. That’s a fair amount of cash you’ll need on hand to start your business, so it’s important to save money as soon as possible in order to protect yourself and your fledgling company financially.
In an interview Business News Daily, entrepreneur Drew Gerber discussed the importance of being financially savvy ahead of the business launching. “Have a plan to cover your expenses in the first month,” he says. “Identify your customers before you open the door so you can have a way to start covering those expenses.”
2. Draft a detailed business plan.
Along with paying attention to your savings and ensuring you have the capital necessary to get the small business up and running, it’s key to have a solid business plan. This will help ensure that you have a roadmap in place to achieve success with the business.
For example, SmallBizDaily, a publication aimed at helping small business owners, suggests that having a business plan not only helps you get funding from lenders but it also “will make your life much easier and save you tons of time later on.”
The publication also has recommendations for how to write a strong business plan. “You have to think about how you’ll handle every aspect of your business — marketing, managing, financing and more. You’re forced to focus on the very areas you’re tempted to skim over (which are usually the places where you need to really drill down),” according to SmallBizDaily. “When your business plan is done, you’ll have a blueprint for success.”
3. Tap a solid network of advisors for help.
While it’s important to have a business plan in place, you should also have a strong network of support to turn to when you have questions about your small business or simply want to talk strategy with people you trust.
After all, starting a business can be difficult. It will help to have people you trust who can support you when you need it most. Plus, you’ll be able to gain useful skills from other people’s experiences that can end up helping you (and your business) in the long run.
4. Understand your own skills and strengths.
A final piece of advice that can help you when starting a new business is to have a good understanding of your own strengths, skills and weaknesses as a business owner. That way, you can pinpoint whom to tap for help and eventually determine what other staff you may need to hire to help your company on its way to profitability.
As part of this, try to figure out what sort of soft and hard skills you have as a leader. Soft skills, for example, are defined as “personal attributes that enable someone to interact effectively and harmoniously with other people.” Meanwhile, hard skills are “specific, teachable abilities that can be defined and measured, such as typing, writing, math, reading and the ability to use software programs,” according to Investopedia.
By having a good handle on your business prowess, you’ll set yourself up for success as an entrepreneur and help your company shine from day one.