The Survival Guide to Your First Year in Business
The Survival Guide to Your First Year in Business
Starting a business can feel like trying to carry an egg through an obstacle course. You’re jumping hurdles, climbing vertical walls, and crawling through muck and mud. As the intensity of the challenge rises with each new encounter, you have to shelter a small, fragile object.
Most small business owners have felt this way at one time or another, particularly during the early stages of running a business. Here are a few tips to ease your journey and keep that egg intact.
Know Your Customer
Who is your target market and why would they purchase what you’re offering? Do they have a need for it? What features make it useful for them? These questions should guide both what you offer and how you market and sell what you’re offering. Start small scale when you’re trying to figure out exactly what your customers want. If you’re selling tastefully designed, succulent displays, try taking them to a local art festival or farmer’s market first to gauge interest before producing dozens in expectation of huge sales. Absorb feedback from your customers and potential customers. Do expect to — and don’t be afraid to — keep iterating on your product.
Know Your Competition
There is so much you can learn by observing and interacting with your competition that can help you in your business. If you’re opening an ice cream shop, visit other ice cream shops in town or in nearby towns to find out what’s working and what’s not. If another local shop recently closed doors, dig into what happened.
Try to forecast your business financials based on your competition if you can get access to their financial statements. If your business can be modeled after a public company, find that company’s 10-K form on the SEC’s Edgar search tool to investigate the structure of the company’s finances.
Review Your Finances
The best time to start a business is when you have your financial ducks in a row, including personal funds and business funds. Figuring out what kind of money you need to start your venture will involve forecasting, so you’ll want to look at the financials of similar businesses (see the above tip), evaluate all operating costs, and know where you’re going to lower costs if you aren’t meeting your goals.
If all the money you’ll need from start to break even doesn’t exist in your bank account, figure out where it’s going to come from. Friends and family may be an option, but if you’re looking for debt financing from a lender, this next step is extremely important to your success.
Bolster Your Credit Scores
Individuals with solid credit scores tend to face less roadblocks when they’re starting a business. Business financing is extremely hard to obtain as a startup, but it’s even harder if you have poor credit scores. Check your scores to see where you stand, and focus on the problem areas. (You can check your credit scores for free on Nav.)
Set Up Your Business Books The Right Way
To be successful in business you need to diligently keep track of your business income and expenses. If you don’t know how this is done, consider taking a bookkeeping class to nail down the basics, or consult a small business accountant. Get a separate bank account for your business so you can more easily keep track of business versus personal expenses. You’ll thank yourself come tax time, too!
Get a Business Credit Card
This is another great way to keep your business and personal expenses separate. A business credit card also allows you to safeguard your personal credit while building your business credit, and if your credit is in good shape, you can qualify for cards with even more generous reward structures than personal cards.
While it’s wonderful to learn as you go, there are some things for which you don’t need to reinvent the wheel. Here is where mentors come in. Although it could take time to find one, you’ll appreciate having the lifeline there when you need it. Look for someone in your network that is (or is referred by) someone you trust, or utilize your local small business development center (SBDC) for free one-on-one mentoring from a business advisor. SBDCs or your nearest SBA office also offer classes and workshops on business subjects that might be useful for you.
Have a Go-To-Market Strategy
Once you’ve started your research by getting to know your customers and what they want, you’ll need to get your business in front of a larger market. Where are your customers, and what motivates them to buy?
Creating a marketing strategy could involve building a website, developing a social media strategy, running online ads, getting your brand on a podcast, or devoting time to search engine optimization. If you’re a new general contractor in town, for example, you might start by establishing a Yelp page, getting on sites like Angie’s List and Thumbtack, or forming a relationship with local real estate agents to bring in business.
Don’t Expand Before You’ve Proven Results
Believing you’re going to grow isn’t the same thing as actually growing. How you spend your money should be determined by your business metrics. Nav CEO Levi King recalls the giddy excitement of building his venture-backed business, and how it led to a costly mistake. “We thought, well, the business is just going to grow and succeed,” he says, “so we might as well have the right space for it. We ended up wasting a bunch of money. We rented all this space, and then only needed half of it. We were forced to sub-lease it at a substantial loss.”
This article originally appeared on Nav.com.More by Lydia Roth