Starting a new business can be very demanding, and the first year is the ‘make-or-break’ period for business owners, regardless of the size of the business. Covering all bases in the first year is integral for business longevity. The following tips for small business owners to ensure they’re setting themselves up for success:
1. Develop a realistic business plan. A business can’t succeed without a plan. This is where you work out the crucial elements that every business must have – finances, marketing, management, and both short– and long-term strategy. Getting everything down on paper before you try to get the business started greatly increases the odds for success.
2. Marketing your business. Successful business owners enlist the services of marketing professionals who understand their business and know which marketing channels will most effectively reach their key target audiences. These business owners also understand the value of advertising through online marketing, social media and other digital resources.
3. Befriend your bank. Looking good on paper matters. Financial institutions provide a better level of assistance to people they know and people who have a clear understanding of their business financials inside and out. Having strong financial backup is crucial to fight all types of ups-and-downs in year one and understanding your business is very important when trying to secure financing.
4. Know your customers. Your first customers are key to the success of your business as they legitimize your idea and demonstrate there’s a market for your products and services. Of equal importance is getting paid – using tools that help determine who your best customers are, those who pay you on time, and those who take longer are key.
5. Watch your pennies. Monitor your profits and losses daily, weekly and monthly. If losses are outweighing profits, look to make immediate changes to help the bottom line. It’s crucial for small business owners to understand the inner-workings of their business – what’s selling and what’s not, where their customers come from, and why they have lost customers in the past.
6. Monitor your competition. Regardless of your product or service, every business has competition. Keeping a close eye on your competitors will help inform calculated changes in your marketing strategy and pricing structure, and help you understand what your competitors are doing to be successful. With a comprehensive understanding of who you’re up against, you’re better positioned to come up with a good idea before they do.
7. Supplier relationships. Assess your vendor relationships to determine who gives you the best payment terms, or those with the best service and support. These relationships will help carry you through your first year, and help to inform your spending, on everything from inventory, and equipment, to professional services.
8. Manage your finances. Many small business owners tend to run out of money quickly because they are not pacing themselves in growing their business. Building a customer base takes time, so it’s important to monitor your spending, to ensure it’s in line with the growth pattern of your business. Using financial management software provides you with a single view of your finances so you always know how you’re doing.
9. Seek professional help. Develop a relationship with a financial professional for advice and strategic insight. Working closely with a trusted business advisor like an accountant consistently throughout the year enables them to better understand your business needs as a whole.
10. Incorporate or not? The process of incorporating a business has become easier for business owners to do on their own as there are many online services that will prepare the paperwork for you and file on your behalf. However, speaking with an accountant or business lawyer about the different paths you can take, and understanding what their ramifications are can save you thousands of dollars down the road. Making incorporation mistakes can be costly and are easily prevented by seeking professional help in advance.
This article originally appeared in the Globe & Mail.