Starting any new business venture is a risk, but there are ways to mitigate the risk and increase your odds for success. While your business model and product may differ wildly from other brands in your area, there are a few sound principles that you can apply before you launch your brand and open your doors. Here are a few top tips for first-time business owners that you can follow to make your business thrive.
1. Research Your Market
You should do the research on your chosen market before you open your virtual or physical doors to the public. It's one thing to have an idea, build a business plan around it, and find funding to get yourself to the level of a startup. All that proves is that you're capable of a strong pitch and sale to parties that can provide you funding. What it doesn't show is how deep your knowledge goes when it comes to the market you're entering.
The market you enter can determine the success of your business. You want to find a location that needs your product or service. This means watching out for oversaturation (where there are too many similar businesses) and avoiding entering a market that isn't interested in your products.
Consider the demographics of your area and the type of customer you will have. You want to build your products for your customer base rather than expecting them to change their behavior to accommodate you.
Also, never make the assumption you know everything about your market. You may be doing something different in an established market and have an idea that makes you stand out, but you're not operating in a vacuum. Look into the history of the industry, learn about the founders, those who made it big, and what made them successful. What you learn will inform you of the steps you should take and sharpen your vision for the business.
2. Explore Your Niche
Every business needs to find its niche to be successful. Knowing who your customers are and sharing how your brand is different from others can help you stand out above the rest. As you develop your business model, determine how your business is different from others. You may offer a different product or emphasize your customer service.
For example, a dentist might open specifically for kids with more toys and brightly covered walls. This is ideal for parents who want to help kids get over their dental fears. The unique niche and business plan set them apart.
It is better to do your research and take your time instead of rushing into a business plan without thoroughly considering your market and niche first.
3. Surround Yourself With Advisors and Mentors
You don't need to reinvent the wheel as a first-time business owner. You can work with people who have already been where you are. Find mentors who can offer advice and listen to your problems. Develop a board of advisors who will review your plans and provide constructive feedback. Even if you did your research and have a solid core plan, you may be making a few obvious small business mistakes that an objective party can catch and prevent.
4. Invest in Professional Development and Learning
Along with finding mentors and other guides to help you, always keep an open mind for learning. Running a business and making it successful can throw unexpected challenges your way that you might not be able to overcome due to a lack of knowledge. Finding educational opportunities to learn from business experts and taking courses that walk you through certain aspects of running a business helps you be a better businessperson.
If you want to know how to be a successful business owner, look at those who already succeed. They attend conferences, chase new ideas, and challenge their beliefs. Set a goal to attend at least one conference or networking event per quarter to boost your knowledge.
5. Find Your Funding
There are multiple funding options available for business owners. You can bootstrap your business by paying for it out of pocket, you can try to secure investment funding, or you can look for first-time business owner loans.
If you are considering taking out loans for first-time business owners, look at your financial plan and consider when you will be able to turn a profit. You may want to look for a repayment plan that has a longer-term but smaller payment to make sure you can meet your financial expectations each month. However, if you are confident that you will turn a profit quickly, you can opt for a smaller payment window and hope for a better interest rate.
Funding is a major part of your business and can determine how quickly you launch your business.
6. Keep Track of Your Finances and Cash Flow
There's a myth within startups and small businesses that there's no way to be profitable when you first start out. Some first-time business owners take this idea to heart and ignore their cash flow for the first few months. It's surprisingly easy to lose track of money as it comes and goes. And when it comes to being a first-time business owner, you probably spend more than you thought you would because of the need for resources to run the business. In turn, you expect revenues to cover your shortfalls, but revenue in the early stages of a new business isn't always steady. You can find yourself short on needed cash at a critical time if you're not paying attention to inflows and outflows.
Don't let yourself fall into the trap of thinking you can put aside doing the books until later. You need to carefully track your bank balances to make sure you can afford various expenses and maintain your balance sheets and track entries as soon as you make or receive payments. Also, focus on sales as soon as your business opens. Set goals for growth and profitability. Even if you aren't making money yet, this will help you focus on being profitable in the future.
7. Know When to Call It Quits
There comes a time when the signs the business is failing are obvious and you should invoke your exit plan. You have to resist the urge to try to pull yourself back from the edge of failure and hold onto the hope that you'll be able to keep going. Sometimes the smartest choice is to shut down the business before the losses reach a point that you're tapping into your personal money reserves to keep the business going.
You want to be able to close the business without going into personal debt and be able to retire all outstanding business debts without trouble. It makes it easier for you to start fresh and try again once you've recovered from the closure. No one says that you can't keep trying, but always make sure to learn from your experiences before starting over.
8. Be Prepared to Embrace Failure
You are going to make mistakes as a business owner. No one does everything perfectly the first time (or the second or third for that matter). Know that there are times when you're going to make financial mistakes or poor hiring decisions that hurt your operations and productivity.
However, if you learn from these errors and avoid making them again in the future, you can keep growing and watch your business succeed.
Even if your community, investors, and employees are cheering for you to succeed, you will likely face several unexpected challenges as a first-time business owner. Starting a business is all about risk. Without the risk of failure, there will be no reward or success. Failure isn't a sign that you are bad at what you do, it's a sign that you tried and stepped out of your comfort zone. Having a plan for failure lets you take care of business assets in an orderly fashion, gives you the opportunity to close out accounts, give employees their payroll on schedule, and close the doors gracefully.
These tips for small business owners are just the start of what you need to make your business thrive. Put your best foot forward, prepare to pay for equity with sweat, and focus on reaching the point where your business reaches success and beyond.