Are you thinking about launching a business? As of 2021, 50% of small businesses failed within five years, 65% within ten, and 20% within the first year. Those are some pretty depressing numbers, but that doesn't mean that your new company needs to fall into that category.
If you want to give your company a chance to survive past the crucial two-year point, here are 6 things you should take into account before you even begin.
1. Your Business Idea
When starting a new business, it's crucial to consider the size of the market for this type of product or service. You should also ensure that there already isn't another company doing what you intend to do. Starting a business might not be such a smart idea if there is an established competitor who already has the attention of your prospective customers.
Research the demographics and purchasing patterns of your target audience. Watch your competitors, network with similar companies, and pay attention to what their clients are saying.
2. Knowledge and Expertise
Your level of knowledge or experience is a crucial issue that must be taken into account when launching a new business. If you don't possess the necessary qualifications or you feel unsure, it might be wise to get an expert so that they can direct and advise your business as you launch.
Knowing when to hire an accountant, web designer, marketing expert, or another professional is also important. This will kickstart your management process as a business owner.
Small businesses typically require liability insurance. There are various liability coverage options available, with the most popular being general liability and professional liability. Other options include commercial property, vehicle, cyber liability, errors and omissions, disability, and workers' compensation insurance.
â€‹â€‹Remember that not all insurance providers are created equal. Insurance plans, prices, and coverage differ, so be sure to research and compare different policies to find the best one to protect your company. Compare a couple of the top carriers based on insurance coverage, price, dependability, customer service, and the way they manage claims. This will help you find the ideal insurer for your company.
4. Finance and Capital
Determine the amount of money you have on hand and how much investment your business will require in order to start operating. Going outside for extra investment may one day be necessary if you can't make enough money on your own. This would require giving up some equity or stake in your new business.
You should also consider whether any government funding is accessible through organizations such as Small Business Innovation Research (SBIR). Investigating what options are available through these programs would be worthwhile given that they can aid in funding research and development initiatives.
The next thing to consider licensing. What types of licenses or permits are necessary for your type of business or your area? Do you possess the accreditations and paperwork required to begin legally? Are there any further conditions that must be fulfilled before a store may be opened, such as obtaining a tax registration certificate, or an occupancy permit for example?
These questions must be addressed before launching the business, as doing so can guarantee that everything goes as planned from the very beginning. If you are having trouble finding information online, you should consider hiring an experienced business lawyer.
6. Sales and Marketing
Finally, another crucial consideration is understanding how sales and marketing work. Persuading potential consumers to buy from you but who require some convincing first is a key component of sales. Knowing when and where to approach them will be crucial because it can take them some time to decide.
Marketing entails spreading the word about your offering by using engaging advertisements, as well as educational blog posts and articles that can help demonstrate why your product or service is better than what people are already using on a daily basis. The good news is that you don't need a big budget to get the word out about your company, you just need to be a little creative.
Starting a company that will stand the test of time and achieves true success depends on a variety of factors. One in eight small businesses succeed in their first year, and you may be one of them if you follow the six tips given above. The most important thing to remember is to test your business idea, conduct your research, and confirm its viability before moving forward.