Most entrepreneurs face business failure at one point or another. Failure is arguably the best university to prepare you to run a successful business. Still, give your startup the best chance and take heed to the following tips.
Build Your Business on a Solid Foundation
Are you one of those people that have plenty of ideas and but never take the time to see if they are feasible? A business starts with an idea, but if you do not validate your business concept, it will lack substance. What is the fuel behind it? What problem are you trying to fix? Who has this problem? What beliefs and values govern how you conduct business? These are examples of some questions you need to answer. If your company does not have a base, it has nothing to stand on.
Launch With More Than a Business Concept
Business planning is tedious. The work outlasts the raw excitement. Take the time to build out each concept. As a CEO, you have to keep the big picture in mind; however, implement your business in small increments. Plan well and launch one product or service at a time.
Know what you are working toward and how you will do get the work done (your vision and mission).
Know your market.
Have laser-focused goals with aligned objectives.
Make sure you follow a strategy through with an action plan.
Execute, track, measure, improve, and repeat.
If you don’t plan, failure is inevitable. If you need help with your plan, you can reach out to your local Small Business Administration (SBA) office or hire either a coach or a consultant.
Launch One Product or Service at a Time
Once you launch your business, you still have more work to do. You will need to market your brand continually. Use a road-map that focuses on one product or service at a time. No matter how well you plan, you will have to adjust to consumer feedback. It will take time and resource to respond to the input. Lower your business failure risk with a conservative launch plan.
Create Your Product and Marketing Based on Your Customers’ Needs—Not Yours
Though you may get a business idea based on something you needed, remember you are in business to fill a void in the marketplace. Do your research to understand your customer base. Build, brand, and market-based on your target customers’ needs and not your wish—that is, if you want to increase your chance of success.
Know Your Break-Even Point
Your break-even point tells you the number of products or services you need to sell to pay your bills. You need the following variables to get your magic number:
The costs that do not change with sales (fixed costs)—rent, insurance, utilities are examples.
Your “it depends on…” expenses directly related to the number of units you sell (variable costs).
The price your customer pays for each unit (mascara, business plan, or widget).
Know your break-even point and tattoo it on your forehead if you need to—use semi-permanent ink, of course.
Have Enough Money or Risk Business Failure
Proper funding is not as simple as it sounds. 82 percent of businesses that fail do so because they lack the cash flow to pay their expenses and invest in the business. Faith may not always fill the gap—after all, faith without being responsible is a child’s fantasy. Start within your means—another reason to have a conservative launch. Create a cash flow statement based on your sales and expense forecast that shows your incoming revenue and outgoing expenses for a given period. Tip: if you see red in any of your cash totals, you don’t have enough money. Meet with a small business consultant or your local SBA office to understand how to create and read a cash flow report.
Develop Thick Skin and Grow Big Ears
Defensive people will fail before they begin. Learn to accept and consider customer and adviser comments. Create a feedback loop in every step. Know your weaknesses as much as you know your strength. Business ownership is for people with the audacity to think they solve a problem and the humility to realize they need input from others.
Don’t cheap your way to failure. Even the most experienced entrepreneur cannot do it alone. A consultant can help vet your idea and check for feasibility before you invest your savings into your venture. Invest in training, consulting, or coaching to increase your chance of success.
It’s natural to fear business failure as a startup. After all who wouldn’t? 50% of businesses fail in the first five years. Owning a business is complicated, but following these tips will increase your chance of success.
Do you have further questions, ask in the comments or ask me on Facebook. Running a business is challenging but not impossible; join the force.