If you've ever considered launching a business, you've probably heard the the alarming statistics and failure rate of small businesses in America. Fortunately, they're not really as bad as they sound.
According to the Small Business Administration, 66 percent of businesses survive for the first two years, while 50 percent survive beyond five years, and 33 percent make it to the ten year mark.
So not terribly grim, but not a walk in the park either. Whether you're thinking about going off on your own or you're ready to up your freelancing game and build a team, preparation is key to your long-term success.
Here are the five things to plan for, so yours is one of the businesses that "makes it."
A Start-Up Budget (and Rainy Day Fund)
You probably read about glamorous start-ups that receive big sources of funding. While it might seem like you need an investor or successful crowd funding campaign to be legit, more than sixty-four percent of business owners start their venture with $10,000 or less. You don't have to have huge amounts of money to start out, but you do have to plan accordingly.
Some solid advice to follow is to plan to spend more than you expect and to make less than you expect- at least in the beginning. It can take a while to get to the point where your revenue is predictable and steady. Research other businesses like yours so you have an idea of what you'll be making, but then plan to make less. Create a conservative budget and give yourself plenty of cushion.
Expect things to go wrong. When they do, the last thing you want to stress about is how you're going to pay for it. Some of the most successful entrepreneurs started out bootstrapping from nearly nothing, and you can too. Daymond John kept his job at Red Lobster while he started FUBU. Cut corners where you can. If Steve Jobs started his business in a garage, you can probably manage just fine in a co-working space for a while.
On the flip side, know which areas are worth investing in, like all the customer-facing aspects of your business. You might not need a fancy office if you don't see clients in person, but sleek website design, great photography, and cohesive branding will set the tone from the beginning. Strong branding can impact on how clients perceive the value of your products or services and even attract better talent. Don't underestimate the power of a compelling brand aesthetic.
When you're wearing all the hats in your business, it's easy to spend all of your time doing the work that comes in rather than generating more work. Most people not only underestimate the value of marketing, but also fail to incorporate the cost of it into their start-up budget. If marketing and prospecting isn't your your thing, find someone who can help you make marketing and lead generation a priority so you're not living in a feast and famine cycle of sales.
A Growth Plan
Marshall Goldsmith wrote a book called "What Got You Here Won't Get You There," and the title summarizes perfectly the growing pains all businesses eventually suffer. It might be hard to consider this when you're just starting out, but the more you can prepare for how your business will need to grow and adapt, the more you'll be able to get through the pains and hit the next stages of growth.
One thing that will help along the way, is to continue your personal growth, too. Trends and tools for running a business are constantly changing. Make time to read and keep expanding your knowledge and your vision will expand with it. Having a mentor or a group that supports you through the growth phases of business can be crucial. Join a local network of entrepreneurs in your area or check out mentorship groups online. Many of these organization require an annual membership, but the rewards and networking opportunities make it worth it.
There is a lot you can't plan for when starting a business. Maybe the economy will tank. Maybe the star employee leaves you high and dry. Life can always throw you a curve ball, but preparing for the things you can control will increase your chances of being in the 33% of founders who are still in business ten years later.