Starting a small business: 7 steps to success
Read time: 3 minutes
Starting a small business and running it successfully are no easy tasks. In fact, most new businesses don't survive to celebrate their fifth birthday. But don't lose faith. There are techniques to improve your business's odds of success. And they almost all come down to following time-tested methods that are easy to learn.
It is all about doing the things you are supposed to do, when you are supposed to do them. If you follow sound fundamentals, your chances of success will be far higher.
Here are seven steps to putting your new business on the road to success.
1. Proceed methodically. Don't take excessive risks
In a study called From Predators to Icons, French academics Michel Villette and Catherine Vuillermot argue that highly successful entrepreneurs such as Ted Turner, Sam Walton and Bernard Arnault are anything but the big risk-takers that popular mythology often makes them out to be.
These famous entrepreneurs are more like predators, moving slowly and cautiously, minimizing risk, and striking at carefully chosen moments when the odds are on their side.
2. Plan effectively
Every ounce of work at the planning stage equals pounds of success at the execution stage. For a new business, it all comes together in a business plan.
Successful entrepreneurs define specific goals in writing. They devote considerable effort to key tasks, such as studying their target market, defining marketing strategies and compiling cash-flow forecasts. They also build industry contacts to help them along the way.
3. Define an effective value proposition
This sounds wordy, but it amounts to making sure that your product or service is more appealing to customers than your competitors' offerings.
Successful entrepreneurs know that no matter how good their offerings are, they won't attract customers unless they have a clear comparative advantage.
4. Line up the right people
Successful entrepreneurs may be the best sales representatives in their firm, but they're rarely also the best accountants, operations managers or legal experts. What they do know is how to assemble effective teams to get the job done.
5. Line up adequate financing in advance
This crucial step is a direct offshoot of proper planning. Financing is a business's oxygen; if it runs out, the business will often die, no matter how strong its potential.
Successful entrepreneurs line up their financing early, before they need the cash. And potential investors, partners and lenders will be far more likely to support the business if they are provided with detailed plans at the outset.
6. Find out what help is available
Federal, provincial and municipal governments and agencies offer a range of assistance to budding entrepreneurs.
There is also a growing number of business incubators and accelerators that specialise in getting businesses off the ground. These organizations are great resources for entrepreneurs looking to build their business network and work in a collaborative space.
It is also a good idea to look at your local chamber of commerce, local economic development centre or business leaders’ association. Many of these organizations have mentorship programs pairing new business owners with established business leaders.
7. Think long term
When entrepreneurs go into business, they are naturally focused on their first weeks and months. However, in many industries, purchasing cycles can be much longer.
For example, an entrepreneur who spends his first year in business developing a new software product will then need to devote considerable time marketing it. By thinking long term, entrepreneurs can make sure they have sufficient resources to get their business on a secure footing.