As any aspiring entrepreneur knows, around 80 percent of companies fail within their first year of business. This does not have to be the case for your startup. Consider the points outlined below to maximize your chances of surviving your first year and prospering in the future.
Are your decisions based on feeling or data?
New entrepreneurs can have a tendency to overlook the data and naively follow what their heart feels when making significant decisions regarding their product or the business as a whole.
Having a basic understanding of Google Analytics is simple to learn and is an invaluable resource for any entrepreneur. Investing a small amount of time when you first start your venture can be incredibly time-saving in the future, as the data can be used to drive your decision-making and prevent you from making costly decisions based on your feelings in the long term.
Related: StartupNation Business Services
Does your company sound like an attractive business to investors?
Your name is an important consideration in the company formation process; not just to communicate your offering to your customers, but also down the line when you’re looking to attract outside investment as your company grows.
If you have already formed your company, it is still possible to change your name, so don’t fret. Your company name has the ability to make your business sound legitimate to investors, so choose it wisely.
Are you growing too quickly?
If your product isn’t a good fit for the market, you expose yourself to compounding product issues with customers and getting out of control if you attempt to grow too quickly.
Growing slowly and organically is much more forgiving of your mistakes, and allows you to retain tighter control of your finances and exposure to risk. It also gives you more time to figure out how you can successfully differentiate yourself from your competitors.
Have you created a business or a product?
Successful entrepreneurs understand the difference between creating a business and providing a product. The former supplies value to a customer over their lifetime, while a product satisfies the customer need only once.
By securing lifetime customers, you can more successfully forecast future revenue and plan your growth according to this. It also allows you to leverage your customers to spread word of mouth about your product. If your business has affected their lifestyle, they are more likely to discuss positive experiences with their peers.
Are you an entrepreneur for the right reasons?
If you’ve started your venture for the sole purpose of getting rich, your startup is unlikely to survive long term. Even with a solid business plan and an established exit strategy, chances are you won’t make money in the company’s infancy.
There is also the danger that you will lose interest in the company before you hit the megabucks. Becoming an entrepreneur from a point of passion will lead you to much greater success.
Are you over-extending yourself in terms of costs?
As you start to grow, you may feel that you need to rent a larger office or buy top-of-the-range new equipment. Think wisely. Bootstrapping is an important concept to stick by as you grow. It will allow you to have money to invest into necessary processes that indirectly increase your revenue.
Do you need a partner?
Going alone in a company does not work for everyone. Some people are excellent creatively, but lack the organizational skills required to run a successful company. If this is the case, it may be worth bringing on a partner with the organizational skills you are lacking.
Having someone with such complementary skills at the same command level as you ensures that you do not overrule his or her decisions. It also allows him or her to focus on what is best for the business, and that which you cannot provide.
Are you sticking too rigidly to your original first year plan?
As you operate and grow, you learn a lot of valuable information about both your industry and your product or service. If this contradicts the assumptions made in your initial business plan, don’t be afraid to adapt now that you have a more complete picture of your situation.
Know when to call it a day
Any new company comes with an element of risk, though you are able to mitigate some of this risk by asking yourself, and answering, the questions laid out above. Not all businesses are destined to succeed, so you must also know when to throw in the towel and call it a day.
Company Formation MadeSimple take the hassle out of the company formation process. They also provide a number of services to help reduce the administrative burden of running a company, allowing you to focus on growing your business.