It is often said that 90% of the startups have the hard games only to be the failures. However, it is not because they are silly or unprepared. They did a lot of preparations and researches, and they created the detailed business plans just like you. It is because the business world is very severe and extremely difficult to survive. What should you do in order to be the 10% of the winners? Here, you can learn, from their mistakes, how to operate your business during the first five years.
To Begin With, Why Do Businesses Fail?
50% of the businesses close down within the first 5 years. This is very large number, isn’t it? All of those business failures have some patterns. By learning what to avoid, you will be able to protect your precious business from ding out.
Cannot pay the bills
The biggest reason of the failures is not to have enough money to keep paying the bills. The large companies usually have very steady cash flow. They took a long time to pay their bills; the average is four to six months. It is essential to know how to control your company’s cash flow like the large companies do.
Offering the products that people are not willing to pay
The lack of the researches on the market needs always results in the failures. You need to consider extremely carefully about what kind of products you are going to offer and how much the price should be. What you want to create may not always be equal to what people want. Therefore, objective analysis on market needs is essential for the business success.
Adapt cost-inefficient marketing strategies
There are a lot of ways to promote your product, and its costs vary. Which medium is the best to promote your products to the targeted audience? Business failures often cannot find the best balance of the scale of the targeted audience and the advertisement cost.
Not have skills to manage the team & company
Management directly affects the company’s success/ failure. Even if you have a great business idea, resources, and the work team, your business could easily fail without the reliable management source. Also, companies should make sure that they are operated by certain systems; not only by the “knowing-all” founder.
Features Of Successful Companies
What 10% of successful entrepreneurs do? Just like the failures have some patterns, succeeded companies also have the patterns.
Product fits the market needs perfectly
As mentioned above, it is essential to ensure that you are producing something that people are willing to pay for. No matter how greatly the business is operated, there will be no success if nobody wants to purchase your product. Successful companies are constantly offering the products that are right on point for the targeted customers.
Pay attention to everything
Successful companies never neglect or ignore anything brought up as an issue during the business process. It is because they know that “boring stuff” could be the key aspect of the business.
Have a strong team
In starting up a company, versatile work team is necessary. If your team has the great skillset and mindset, you are very likely to survive your first five years. Startups always have a lot of challenges; constantly make changes, adjust to the market, analyze the situations, and adapt something new. It cannot be handled only by the one-man competence. Also, a data shows that the startups with co-founder have the higher rate of surviving compared to the solo founder’s businesses.
Make the business grow fast
You may think that it is unavoidable for many companies to lose their money during the first two years; because that’s the hardest period of time in starting up the business. But it does not mean that you have to lose money too. Growing fast is not a unrealistic thing to achieve. If your company grows fast, you do not have to worry about running out of cash, which is the second biggest reason of business failures. In addition, it is much earlier for them to find the good investors because we all like the immediate profits.
5 Tips To Survive The First 5 years
What specifically should you do to avoid the business failure? What do you need to be a successful business owner? Here are the 5 tips that you can practice for your company.
1. Make commitment
Make a commitment to yourself that you are going to stay in this business for at least the next five years. And also what to achieve during this period of time. The strong will is important and has a great effect on your business growth, maybe more than you expect.
2. Take notice of long-term success
Always think ahead, and do not be swayed by the thought of a quick profit. If you have a solid long-term business plan, and follow it faithfully, your company will bloom soon. It may sounds conflicted about the fast-growing companies mentioned earlier. Growing fast is still possible for the companies, however, only if you do not sacrifice the future profits for a momentary gain.
3. Build the good credit
Good credit is necessary for the leasing and other business transactions. However, you don’t need to worry about showing some losses at the beginning. It is unavoidable for many companies to have deficit when they just started operating their business. As long as your company is growing steadily, you will be able to establish the good credit for your company.
4. Plan for success, but not failure
Do not take it wrong. It does not mean you don’t need the exiting strategies; All companies should know what to do in case of closing down their businesses. However, in terms of the business plan, you should build it based on the vision of yourself being successful.
5. Know when to make changes
As you are doing business, you will face to the time when you need to make changes; on your product, branding, or business plan. Listen to the customers and the market, and know when and what to change. The proper shift in the business can give your company the opportunity to enlarge the business scale and increase the profits.