While it’s difficult to imagine when looking at the world’s most successful entrepreneurs and businesses owners, the simple truth of the matter is that everyone was a rookie business owner at one point or another.
Recognizing this, it’s wise for first-time business owners like yourself to learn from those who’ve gone before you.
Your Chances of Surviving Are…
You’ve probably heard this horrifying statistic before: 9 out of 10 startups fail. While this is the cold, hard truth, it’s something entrepreneurs need to really understand. Ultimately, this high failure rate should light a spark and encourage you to work both smarter and harder.
Don’t worry, though. We do have some good news. While 90 percent of new ventures eventually fail, the U.S. Bureau of Labor reports that 75 percent of new businesses survive the first year, 69 percent make it past the first two years, and 50 percent reach the five-year mark. In other words, you’ve got some time to figure things out. Statistically speaking, you’re just as likely to survive five years as you are to fail.
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7 Things You Absolutely Must Know
The margin between surviving and flopping isn’t always that big. While the business idea, execution, and marketplace demand for the product are all key parts of success, the reality is that much of your success as a business owner is tied to the small things you know. Keeping this in mind, let’s review a handful of valuable tips that you should learn right away.
1. Focus on Doing One Thing Very Well
Are you a jack of all trades, but a master of none? This isn’t a healthy combination for a business owner especially one who’s just getting his feet wet. The key is to find something and focus on it.
Many first-time business owners feel the need to jump at any little opportunity that presents itself to them. And while it’s great to be ready and aware, there needs to be some focus and stability to your venture. Ignore opportunities that don’t align with your core pursuits and resist the temptation to juggle multiple ventures. It’s far better to do one thing perfectly than to do 10 things fairly well.
2. Learn How to Budget
People often think they’re good at budgeting, and then they launch a business and suddenly realize they aren’t as disciplined or farsighted as they originally thought. Meticulous budgeting is one of the most important demands for a rookie business owner. With good budgeting, you can avoid getting stuck in a precarious situation. With poor budgeting, you’ll quickly become part of the 90 percent.
“Spending money is a whole lot easier than making it, so when you’re building out a plan, keep a sheet of every expense to know exactly where you are with your spending,” says Revel Systems, a leading iPad Point of Sale system. “Don’t get tempted to say yes to every neat, fancy object that presents itself if you don’t have the finances. Be smart and, most importantly, aware when it comes to money.”
3. Hire People Who are Different Than You
When launching your first business, there’s a tendency to surround yourself with people you enjoy being around. This means friends, family members, previous co-workers, and other folks you know. After all, wouldn’t it be fun to enjoy the people you go to work with each day? Well, it would…but are you trying to run a country club or a profitable business?
Be very careful with who you hire. The decisions you make in the first year of business will make or break the venture. Down the road, you could recover from a bad hire. Initially, a bad hire could compromise everything.
The key is to hire people who are different than you. While this may seem like strange advice, remember that you’re hiring for the good of the business (not your comfort level or social life). By hiring people who are different than you, the business instantly becomes more balanced, more knowledgeable, and more diverse.
4. Take Plenty of Risks
There’s nothing safe about building a successful, revenue-producing business. If it were easy or safe, wouldn’t everyone own a business? In order to thrive, you need to take a healthy dose of educated risks.
With educated risks, the risk could come back to bite you and damage your business, but it isn’t going to put you out of business. These are the risks you want to identify and pursue. If you consistently confront these opportunities, you’ll end up benefitting far more than hurting.
5. Develop a Cheering Fan Section
You can pay for as much advertising, media mentions, and website traffic as you want, but at some point, you have to develop organic traffic and word of mouth. Thankfully, this is easier than ever with the power of the internet and social media on your side.
You can begin to develop word of mouth marketing by building relationships with influencers, bloggers, reviewers, and editors. But above all else, focus on delivering quality content and you’ll naturally reach and engage the people that matter most, the customers.
“The aim in word of mouth marketing is to provide customers with such an unbelievably amazing, life-affirming product or service that they can’t help but share their experience with friends, family, co-workers, and the random dude who sits at the bus stop every day with his exotic parrot,” says marketing expert Megan Marrs.
6. Reinvest Back Into the Company
Getting a business to cash flow and become profitable can take a while. So naturally, when it finally does begin making money, the business owner often wants to pull a substantial paycheck. Unfortunately, this is one of the biggest mistakes a rookie business owner can make.
While it’s fine to take a paycheck and even a decent sized one you shouldn’t pay yourself more than a reasonable amount. The majority should be reinvested back into the company to provide some financial security, pay off debt, build up inventories, etc. By reinvesting profits at the beginning, you can enjoy a better paycheck down the road.
7. Take Care of Yourself
As a business owner, you are the great asset. As you go, so goes the company. With that being said, it’s important that you take care of yourself. You will be much more productive and sharp when you’re feeling good.
As tempting as it can be to work 80 hours per week, grab fast food for all three meals, and lay on the sofa watching TV during your precious few hours off, your body deserves more. Put a reasonable cap on the hours you work, spend a few extra minutes preparing healthy meals, and get at least 30 minutes of exercise or physical activity each day. Your body will thank you and so will your business.
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Don’t Just Survive…Thrive
Being a rookie business owner is scary, exciting, and demanding, all at the same time. It’s not something you can prepare for and it requires a lot of on-the-job learning. However, you can look to those who’ve gone before you and derive valuable lessons from their successes and failures.
In the end, this powerful advice should allow you to thrive.