Some say that going into business for yourself is the very definition of the American dream, and I tend to agree. This country affords us the opportunity to access capital, a talented labor force, and necessary tools to start our business. Though it is important to note that one out of every five small business ventures fail within the first year, but that doesn’t mean yours has to. You just need to be proactive and address the needs ahead of time. With a few simple tips you could be well on your way to success.
Drafting a business plan isn’t only the most important step in starting a new business, it should also be the first one! Many people have all the desire in the world, but they fail to plan ahead of time. You need to understand how many people you will need to employ, how much capital you have to work with, how you will obtain that capital, and how you plan to breakeven. The breakeven point is the most crucial point of your plan. After all, once you achieve breakeven, you then start turning a marginal profit on whatever it is you’re selling.
Focusing on your core business is another important aspect to success. Often times companies tend to branch out into ventures unrelated to the core of their business, losing sight of their initial goals, and ultimately leading to failure. Consider the intricacies of accounting and payroll services. They may seem like simple tasks at first, but they can become quite complex and lead to legal issues it they aren’t addressed properly. Hire outside services to handle these, and you will be thankful of all the money you save in the long run.
Understand where the resources for capital will be coming from, and the overall cost of capital. These are fundamental areas that every fortune 500 company addresses at least once every year. Will you be privately funding the business? Will you need a bank, or family loan? If so, what is the interest rate you will be charged, and what will you have to put up as collateral? Considering the failure rate of small businesses, make sure that you have the necessary savings to achieve success.