So You Want to Start a Business: Tips for Success
I want to start a small business. I have a large empty backyard, a green thumb, a way with flowers, and a well-documented need for extra cash. I want to sell flowers to Realtors and restaurants. I would truly like to stay with a genuinely naïve idea that that’s all I need to be a success, but the reality is that so much more is needed to keep from failing.
The truth is according to the Small Business (SBA) Office of Advocacy roughly 20 percent of small businesses fail in the first year, and only about half will survive past the five-year mark. Beyond that, only one in three small businesses survive 10 years. You need so much more than passion to be a successful small business owner.
After a bit of research I’ve discovered that there are several things that small businesses really need to succeed:
1. They have to have a plan
A well-designed business plan lays out a vision of growth and the steps needed to get there. The primary purpose of a business plan is to define what the business is or what it intends to be over time.
So whether it’s an MBA-inspired business plan, one put together with the help of your local SBA or SCORE offices, or just an outline on an envelope, you have to have a business plan. I have a friend, who for more than a few years has been saying she’s starting a business but it’s gone nowhere. Primarily because she won’t sit down and write out a plan. I’m halfway through mine; It’s rather tedious but I know its importance.
2. They do their market research.
“A key indicator to success is effective planning,” says Michael Ricks, district manager of New Orleans’ SBA office. “First and foremost you must know your market. Is there really a need for your business?”
You could have the greatest mind for business, the perfect price point and the perfectly perfective product buy if no one wants or needs it, your business simply won’t succeed.
3. They are flexible.
You have to be ready to take advantage of any and all opportunities.
“Post-Katrina was a time when many business models were disrupted,” says Ricks. “But the key to the success of some businesses going forward was their ability to see the new opportunities and take advantage of them. Even small changes such as new competition, disruptive technology, or even changes in traffic flow, if you can be flexible and adjust your business model you can turn these challenges to your advantage and be successful.
4. They made sure they had enough capital.
Whether you have to get loan, borrow from friends or family or take out a second mortgage on your house, you have to have enough money to promote your business and keep it financed as you build it.
I’m saving money for my business, which I hope to start this spring, but I’m pretty sure I won’t have enough to really make a splash.
Next week I’ll be back to profiling other businesses but periodically I hope to take you on my journey of starting a new small business. I welcome any advice from others. Maybe we can begin a forum of hints and tips.