Nearly half of all small businesses fail within the first two years of operation. The number one reason for small business failure is inadequate planning. The purpose of business is to generate revenue, without a proper plan including calculated risk and gain, there’s a possibility that it might fail soon. The second reason is under-capitalization. We all know that money makes money, how true it is. To run a business there must be allocated running capital for daily transactions that must include funds for replenishment of stocks, employee salary, advertisement cost. The main challenge for a small business is to survive in the initial stage when it goes through the stages of strengthening its foundation and establishing itself as a reputable, trustworthy and known-to-all business house.
So, before you mortgage your house, or go into debt financing your business, you need to know if your business is going to do more than survive — you want to know if it’s good enough to thrive! Here are three things namely Idea, Market and Ability, those are important for a successful business that have stayed in business for five years or longer have in common:
A successful business start-up always starts with an idea. Something that makes your business stand out from all the rest. So how do you know if you’ve got a good idea?
You’ve probably got a good idea if you can answer yes to any of the following questions: Does your idea provide the solution to a significant problem for your target market? Does it satisfy a need or want? Does it create an opportunity? We all might have known already how to sell a ball pen to someone; it is the need; a person cannot sign his name without a pen. So, it is the need that forces people to buy, to take services. A business must offer something to its potential customer, the more unique the product is the more possibility that your business will thrive.
The most successful businesses either fix problems (either real or perceived), or they increase your customer’s pleasure. They create a repeat need for a product or service among the target market.
Your chances of survival are better if you can answer the following questions with a yes: Is there already a market for your product or service? (It’s much easier to fill a need than trying to create an entirely new market.) Can your target market afford to buy your products or services? (If they can’t afford it, it doesn’t matter how great it is, you won’t sell any!) Will your target market perceive your product or service as valuable? (If they want it, but don’t think it’s worth what you’re selling it for, you won’t make any sales.)
Do you have the people, the resources and the knowledge to be able to consistently provide your products or services to your target market? Can you maintain a competitive advantage? Do you have enough manpower? Can you purchase the supplies and materials you need in the long run?
To make and execute
Your first step is always to create a solid business plan. Your business plan is more than an essay on “Why I deserve to get funding for my idea” however. Don’t spend all the time creating a business plan and then toss it in the bottom drawer of your desk. Your business plan should be a living, breathing roadmap that helps you make sure you’re on course and reaching the goals that you set for your business.
To get enough fund
The second step to business survival is getting enough financing. Although the term “bootstrap entrepreneur” describes most small business owners, having enough capital to be able to keep your business afloat is vital to your survival.
If finding financing is a problem, either because you don’t have enough credit or equity, or there are other problems, take the time to look into the resources that are available in your community. There are a wide variety of grants and loans (including microloans) for entrepreneurs, if you know where to look, such as the Chamber of Commerce.
Find a mentor. Most entrepreneurs have great skills and abilities, but no one does everything well. You probably already know what your strengths and weaknesses are. (If not, there are many resources and tools that can help you figure it out!) Rather than ignoring your weaknesses, find a mentor who can help you either build your skills in your weaker areas, or offer advice for getting what you need.