According to the U.S. Small Business Administration, about 600,000 businesses are started each month in the United States. That’s a lot of new businesses! But what percentage of those businesses make it past their first year? Unfortunately, only about half survive. So, what can you do to increase your chances of starting and running a successful business?
There’s no single answer, but we’ve compiled a list of 10 things you can do to increase your chances of success:
1. Do Your Research
Starting a business is a big decision, so you want to make sure you’re doing it for the right reasons. Do some soul-searching and make sure you have a good idea of what you’re getting into. The idea of starting a business is exciting, but running a business is a lot of work, so make sure you know all the particulars of what it takes and whether you can make a profit.
2. Have a Clear Vision
What does your business stand for? What are your goals and objectives? Define your brand and create a mission statement to keep you on track.
3. Plan, Plan, Plan
Good planning is essential for any business, big or small. Create a business plan to help you stay organized and focused on your goals.
4. Know Your Competition
Research your industry and find out who your competitors are. What are they doing well? Where can you improve?
5. Understand Your Finances
Before starting your business, you need to have a good understanding of your financial situation. How much money do you have to invest? What are your overhead costs? How will you make a profit?
6. Choose the Right Business Structure
There are a variety of business structures to choose from, and each has its own advantages and disadvantages. Do your research and decide which structure is best for you.
7. Register with the IRS
Once you’ve chosen your business structure, you need to register with the IRS and get an Employer Identification Number (EIN). If you are running a sole proprietorship, then you can use your social security number instead of an EIN.
8. Get Insurance
No matter what type of business you have, it’s important to have insurance. Health insurance, liability insurance, and property damage insurance are just a few of the types of insurance you may need.
9. Establish Your Brand
A strong brand is essential for any business. Create a logo and tagline and start building a presence online and offline.
10. Stay Motivated
Owning your own business can be challenging, so you need to stay motivated and focused on your goals. Set realistic expectations, stay organized, and don’t be afraid to ask for help when you need it.
Below is a list of the most common business structures. The structure of your business depends on multiple factors, such as will you have employees, or what kind of potential risk is associated with your business.
Limited Liability Company (LLC) – An LLC is a popular business structure because it offers the benefits of a corporation (limited liability) without the formalities and regulations.
Sole Proprietorship – A sole proprietorship is the simplest business structure and is ideal for businesses with one owner. There are no required filings or registrations, and the owner is responsible for all debts and liabilities.
Partnership – A partnership is a business structure with two or more owners. Each partner is equally responsible for the debts and liabilities of the business.
Corporation – A corporation is a formal business structure with shareholders, directors, officers, and bylaws. It offers limited liability protection to its shareholders but is subject to double taxation.
FOUR VERY Important Tips
If you are going to start a business, before you do anything, find some companies or people you see as potential customers. Ask them the following questions to see just how much opportunity is available for you. This will give you the proof you need to excel to the next level and keep that business going.
1: Know Exactly What You Do That Customers Will Pay For
Example Statement: My “product name” solves “problem” so you can get this “value” from it.
Example: My CRM software solves the problem of repetitive tasks by automating them so you can spend more time selling versus doing administrative work.
2: How much money would you pay for “product name”?
Tip: They may say zero they may say a low number, but just get some kind of answer out of them. People always associate the “unknown”, which is your product, with something they already know. Make note of this association as you may run across it again and understanding how someone got to that comparison can help you create better messaging and avoid confusion.
3: Regardless of the type of business, you should know who will pay you.
Tip: Even the greatest ideas fail. Why? Because they cannot get any customers. If you have a product that solves a problem make sure you know the people who will pay to solve that problem. This goes especially for software products, because of the time, money, and effort required to build and maintain them.
4. Spend as little money as possible
Tip: You need to be cheap and think about every dollar you spend. All those small expenses add up and can take away from marketing budgets and your war chest of money.
These four tips can save you a lot of headaches and money, so you avoid being in that 50% of small businesses that fail.
Note: Now these tips may not apply to some service industry businesses, but you still need to understand what people think you are offering and how much opportunity is available.
Remember when starting a new business, sales matter most. No sales, no income, and eventually no business.
Now that you know how to start a business, the next step is to put your plan into action. Use these tips to get started, and don’t forget to stay motivated and focused on your goals. Good luck!