Each year, thousands of aspiring entrepreneurs take the huge step of launching a new company. And each year, thousands of aspiring entrepreneurs fail in their bid to start a new company! The unfortunate truth is that the majority of new enterprises will fail within the first year, and nearly all will fail within the first three years.
Only a small handful of companies, statistics estimate about 10%, actually survive the growing pains of the business launch phase and actually become strong, profitable companies. Although this is true, there is good news. The large majority of companies that fail, fail due to preventable causes. In order to successfully launch your company, follow these tips.
Write It Out
For some unknown reason, scores of aspiring entrepreneurs believe it’s possible to build the next great American empire without even writing out the idea in the form of a business plan! This is absolute lunacy. Before you can launch a successful business, you must write out a detailed business plan that discusses the following:
- Management Background and Qualifications
- Complete breakdown of business model
- Marketing Plan
- Financial Projections
You can find free business plan templates online with a simple Google search.
Test Your Idea
Dreamers rarely want critical feedback from those who believe differently. Take your idea and purposefully share it with key people who have industry knowledge. The critical feedback these key contacts give you is essential to a successful business launch. They may point out huge gaping holes in your business model, or they may all be very excited for you and believe in the model. Many entrepreneurs are afraid to engage in this step of the process because it makes them vulnerable, and strong rejections can easily damage a fragile ego. However, the potential feedback should be viewed as absolutely essential, and you should search for it at all costs.
Cash is the lifeblood of a company. The day a company runs out of cash is the day it is out of business. With this thought in mind, it is 100% essential that you develop a bulletproof financial plan for your business launch that takes into account every worst-case scenario possible. Determine exactly how much money you will need to develop and bring your product or service to market. Then, determine how long it will take to be begin securing sales and generating revenue. In most businesses, you should have a plan in place for how to finance business operations with the notion of no revenue for 6-12 months. Once you determine how much capital that will require, determine how you will raise this money. Do you have it in savings, can you borrow it from friends and family, or do you need to search for investors? Will you secure a working capital business loan?
Take On Partners
Many new business owners are hesitant to bring on partners. Starting a business is incredibly difficult and stressful. A competent partner can help alleviate some of that stress. Henry Ford used to say that a large portion of his success was due to his ability to always hire people smarter than himself. If you do take on a partner, make sure to choose someone that has an exceptional skill set in some aspect of the business that you do not have.
Keep Expenses Down
Back to the money again–keep expenses as low as possible. When starting out, it is easy to fall prey to daydreams of instant success and an easy road. It won’t happen! There will be bumps along the way, and if you keep your finances extremely conservative until substantial revenue is being generated, you will greatly increase your chances of for a successful business launch. Even if you do not use it, a working capital business loan can help act as a financial cushion. Keep your expenditures to products and services that are essential to bring the product to market. In other words, don’t spend money on expensive office furniture, etc.
With forethought, research and restraint, your new business launch can be a success. Without these activities, you’re taking your chances!
This article was contributed by Jason Hoerr at Small Business Loans Direct. Jason Hoerr is a writer for smallbusinessloansdirect.com, entrepreneur, and trader based in Charlotte, NC.