Regardless of the niche that you are trying to penetrate, the beginning is bound to be difficult, and most startups barely survive.
Let’s face it; you are not the only person in your niche with a great business idea. Despite that, what really matters in business success is not the strength of your idea, but the strategies that you employ to make your business a success.
With about 90% of businesses failing within the first five years, it is clear that the odds are stacked up against you. To be part of the successful 10 % of businesses that live long enough to make considerable profits, you need to be smarter than your competitors.
Here are 4 crucial things you need to do to ensure that every step of your startup gets you closer to reaching its full potential (and maybe making you millions while you’re at it).
1. Build a solid business plan
A business plan is a document that elaborates your plan to achieve your business goals.
It all starts with the goals. Important goals that you should define when creating your startup include;
- Define your customers and locate them
- Build your product
- Launch your product
- Milestones to reach before your launch
- Reach x amount in revenue by y number of years
With a list of the goals you want to achieve and the timeline you want to achieve them in, it’s time to start creating a plan. What steps will you take to bring you closer to your goals?
A plan helps you have a clear picture of the decisions you’re going to take, the resources you are going to need and the potential setbacks that you may face.
By creating a formal business plan, you are increasing your chances of success by up to 16%. By failing to plan first, you’re setting yourself up for failure.
2. Create a product your customers need
42% of businesses fail due low market need.
Does your product or service fill a need in the market? Are there people who are willing to buy your product?
Let’s face it. One of the key motivators behind your startup is making money. If you’re not making money, how will you pay your bills?
One of the biggest blows your startup can suffer after you’re up and running is to run out of product demand.
Product demand drives sales. Without customers who need and want your product, you’ll have no one to sell to, and you’re headed down a path that leads to failure.
To ensure that your business remains profitable, you have to ensure that what you’re offering your customers is in demand and that it’s good enough to give you an edge over your competitors.
How do you create a product that’s profitable? Do market research. It’s that simple.
Before launching your startup, you need to invest a lot of your resources into knowing who your target customers are, what they need and where you can find them. If you realize that your product isn’t in demand, you can go back to the drawing board and figure out what to do.
According to The Balance, Market research shows you where the opportunities are. This means that even before you launch, you’re destined for success.
3. Maintain a healthy cash flow
As your startup grows, you’ll need money to invest in big projects that take you the extra mile.
Saving and reducing your budget doesn’t cut it. You have to have enough money to fall back on when you need to make a huge financial leap such as venturing into a new market or introducing a new product.
To keep growing, you need to maintain a strong cash flow. This means that the money coming into your business should be more than the money going out. It has little to do with spending within your means and has everything to do with increasing your assets, resources, and value to ensure that when you need to grow, you have the necessary resources to finance it.
When your business is making just enough money to survive, but not enough money to grow rapidly, you need external sources of money. There are two ways to get the funding you need.
- Find investors to back you up. Business investors are always looking for growing startups that show promise in making them money. If you have a great product and an elaborate business plan, it’s not hard to find investors to invest in your startup. Relying on investors allows you to focus on growing your business without worrying about where you’ll get the funds to grow your startup.
- Take a loan. Taking a loan from a friend or a family member can ruin your personal relationships if your startup fails. This is why about 8% of all startups use business loans as their primary source of funding. To ensure you succeed, do some research on local firms or banks that offer small business funding in the form of loans. You’ll need the loan to invest into your business and then pay the loan off when your business picks up and starts generating profits.
Finances are a tricky topic for most startup founders. It’s a good habit to know where you’ll get your funding from even before you need the money. It’ll help you look for the best solutions available and avoid last-minute mistakes.
4. Spend within your means
Bad spending habits guarantee that you will fail in future. This is true in life and business as well.
Simple math proves that if you spend more than you’re making, you’ll eventually run out of resources.
During the first few months after launching, many business owners lose track of their spending. There is too much to do, and too little time to take inventory of everything. They spend way too much of their money of non-essentials, and in the long run, they realize too late that they’ve run out of cash.
When you start a business, it’s very easy to imagine you’re going to make profits within the first month, but that isn’t always true. Most startups rely on their capital for a few months before they start making money.
To ensure that you are spending the right amount of money, come up with a list of your business’s essentials. Everything else can wait until you’re more financially grounded.
Do you need to hire more employees to survive? Do you need bigger office space? Do you need paid vacations for your team? The key thing is to identify what you need to survive and only spend just enough money on that.
The lifeline of startup success is the decision-making abilities of the founder. For every startup that succeeds and blossoms into a profitable business, there are hundreds of others that launched and failed, and others that no one will ever hear about.
Don’t let your startup fail. Learn from the mistakes of startups that excelled and ensure that your startup not only survives for the first few years but also thrives to outperform its competitors and make handsome profits for you and your investors.