AZ Big Media 5 Tips to Set Your Business Up for Success
The pandemic has brought about a new wave of entrepreneurs. According to United States Census Bureau5.4 million business applications were filed in 2021. These entrepreneurs were taking a risk. According to Fast Companythe failure rate of small businesses remains high: 20% fail after two years, 50% after five years and 70% go bankrupt after 10 years. As president of the Association for Entrepreneurship USA and business owner, I have seen the ins and outs of running a successful business. Here are five ways to make sure you’re setting up your business for success:
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Conduct market research
When starting your own business, you want to make sure you research the different aspects of your business such as supply chain, business models, expenses, etc. Additionally, you should research your target audiences, test the product/service before launching it. and collecting competitor information. A great place to find information about your competitors is to visit their website and social media accounts. These resources can give you some insight into what works or doesn’t work well for them. Then you can determine how you plan to market your own products/services.
If your business product or service is already established, try working in the industry first before investing your time and energy in it. When starting a business, you can find an existing business for sale by contacting a business broker (or using BizBuySell or LoopNet) for more information. Your ideal business may be for sale. You can get a wealth of information by meeting with a business broker, such as all profit and loss statements, costs, payroll, insurance, and taxes for an existing business. Then you can meet the seller/business owner and hear all about your ideal business from the inside.
If your idea or service is new, start with a small-scale test to see the potential. This can help minimize costs, as failure is always a possibility.
Get ready for inflation
From June 2022, the annual inflation rate rose to 9.1%. If you are starting your business now during this time of rising inflation, contact your accountant to put a plan in place. Calculate the sum of your costs and calculate what you need to sell your product/service to make a profit. If you can, work with local suppliers to potentially reduce the cost of supplies. New businesses generally do not get purchasing power discounts, quite the contrary. Ask yourself: Am I in the realm of needs or wants? Example: I need new tires for my car and I want new rims for my tyres. During a period of inflation, people may choose to save on expenses for “needs” like rims. Restaurants are another example of a type of business that could suffer. Therefore, if you are in a “wanted” business, be prepared for fluctuating sales in times of high inflation.
Hire the right people
It is one of the most important milestones in the success or failure of a business. Select the people who will work for you. Create archetypes of the best employees you envision for your business. Right now we are experiencing a labor shortage, so many business owners might be tempted to hire, just to hire. However, it’s important to make sure you have the right people working for you. Once you have a core group for leadership, talk to them about all the employee references they have. Have they worked in the business you are starting? Do you rely on them or do they help you? Will they open a location for you?
Be sure to conduct in-person interviews to get to know the potential employee face-to-face. Get a list of references from them too, so you can talk to people who can vouch for their work ethic. Call previous employers and read between the lines if they are reluctant to speak. Ask the question: “Would you rehire them?”
Keep expenses low in the beginning
Funding has always been a critical component of business success and failure. Are you using your nest egg, retirement savings, or even taking out a loan for your home? Be wise with spending. Even if you’re starting your business with a big budget, you want to make sure you stretch it as much as possible. Entrepreneurs should find ways to keep costs as low as possible to foster success in the future. When you’re working with a budget, you can still spend your savings in the future, but if you’re in a lot of debt, it can be hard to get back out of it during downturns in business. An important note: Keep control of your payroll taxes! If this is backed up, the government may seize your bank account, which could put your bills at risk.
Starting a business is not easy. There will be many bumps and challenges in your first year in business and it is important that you learn to ride these bumpy waves. Tenacity is the biggest component of being a successful person. Be ready for any challenge at any time. You have to have the attitude, if you come to a wall, say to yourself: “My plan is to go through it, over it, under it or around it, but that won’t stop me.”
The tips above will help you in your first year as a business owner. Remember that it is important to be prepared, to plan ahead and not to give up.
Author: Jack Diehl, president of the Association for Entrepreneurship USA, graduated from the Rochester Institute of Technology with a bachelor’s degree in manufacturing engineering. His initial 10-year career included setting up a new Maverick missile homing assembly plant and project engineering and procurement for Hughes Aircraft Missile Systems Group. After leaving Hughes, Jack developed an auto repair operation of 9 different auto repair centers. He was responsible for initial site selection, real estate development, business financing, staffing, quality control and other aspects necessary to own and operate a successful small business. for more than 20 years. Originally from a rural farming community in upstate New York, Jack now lives in Tucson, Arizona. His interests include national and international travel, motor sports and jazz music.