Are you planning to start your own business? If the answer’s yes, chances are you’ve heard 50% of all new businesses fail within two years. That’s a grim statistic – and it’s not true.
But the risks of failure for a small business owner are real. According to the Bureau of Labor Statistics, 20% of new businesses fail in year one or two. At the end of ten years, only 25% are still operating.
Knowing what separates successful businesses from failures is critical as a new business owner. So let’s take a look at seven proven business tips.
1. Identify Your Business Opportunity
It’s easy to get excited about running your own business, but now’s the time to step back and take a deep breath. Is the opportunity solid? Do the numbers back it up? Is the market you’re looking at expanding? Or shrinking?
Do you have the skills, knowledge, and experience to run a business? Do you have the resources to sustain your business until profits come in?
2. Create Your Business Plan
Yes, you need to take the time to create a business plan. If you think you don’t need one, you shouldn’t be starting a business. Business plans are one factor that separates successes from failures.
A business plan is your roadmap. Without it, your chance of getting where you want to go depends on luck. And that’s not a good business strategy!
3. Solidify Your Financing
Depending on the type of business, the need for investment will vary. But, at a minimum, you should have at least six months of operating expenses in the bank. Cash shortfalls are the single biggest reason small businesses fail.
4. Name Your Business
What’s in a name? The ideal name separates you from a sea of competitors. A name becomes the base you build your brand on, and all of your marketing runs through and supports your business name.
The right name becomes a strength, part of your business strategy. It gives customers a reason to do business with you. And don’t forget to register and protect your name!
5. Choose the Right Business Structure
Sole proprietorship, partnership, LLC, corporation – each business structure has its own advantages and disadvantages. Taxes and liability exposure vary greatly with each type. Choosing a structure carefully when you start your business is critical.
6. Do It By the Book
Don’t forget to apply for – and get – all of the necessary permits and licenses your business needs. Be sure you know which local, state, and federal paperwork you must complete.
7. Added Insurance
Speak to an insurance professional and get the information you need to ensure you are fully insured. Starting a business is risky – and that’s what insurance is for. It can protect you, your employees, your property, and your intellectual property.
A Successful Small Business Owner
What separates the successful small business owner from the failures? It’s the ability to identify and capitalize on a business opportunity while paying attention to all the planning and details. No shortcuts!
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