Many, if not most, businesses started out small and indeed, a lot of successful ventures are rife with stories of little fish that managed to join the pond with the big fish.
But as there are success stories, many have turned out as failures. Start-ups have become one of the most popular by-words in the commerce and retail industries today.
It empowers individuals with visions of entrepreneurial genius with the belief that their products or services would do well in the market.
The Business Dynamics Statistics of the US Census Bureau revealed that based on data, 69% of US entrepreneurs started their business small, which means that it either operates from a relatively small office or at home.
Majority of small business owners at 51% belonged to the age range of 50-88 years old, 33% belonging to the 35-49 age range and 16% aged 35 and under.
According to the US Bureau of Labor Statistics, more than half of start up businesses failed during the first four years of operations. Using data for small businesses from 2011, only 4% made it to the first year, 3% made it to the third year, 9% on the fourth year and 3% made it to the fifth year.
Among the reasons for the failures were attributed to incompetence at 46%, lack of managerial or leadership experience at 30%, catchall categories such as fraud, disasters or neglect at 13% and inexperience on lines of goods or services at 11%.
It pays to know the ropes
It’s critical to ensure that you start learning the tools of the trade if you want to start one and ensure its success. You can’t go to fight a battle without your battle gear, so the same thing goes with starting a business and running it.
The figures say it all. You must be able to know the basics of how to run a business, from production, keeping your books, selling, and marketing. Learn how to play your game if you want to join in.
If you are employed and want to invest, you can get advice from your company’s employee financial wellness program to help you find out how to weigh your investment or business options. You may be able to ask basic questions and get valuable tips from financial consultants or accomplished entrepreneurs.
Know your niche
It is important to know your market. You can do your research and conduct a feasibility study of a proposed project to help you determine the viability of your start-up business.
Make sure to identify your specific market and see if your products or services are a good fit. Take advantage of social networks and available learning resources before setting it up.
Ensure your capitalization
You need to have a funding source to finance your business. Don’t expect to get into business without putting in the money for it.
Make sure to compute your potential expenses ranging from fixed costs, production costs, freight and shipping, and administrative expenses. If you have money in your hands, compute your expenses versus your start-up capital and see how long it could last you. Ideally, businesses usually start seeing a return on investments in as early as six months to as long as two years.
Get the right people
Hire the best people to work for you. If you find it too much to match their compensation package, at least you can hire people with experience to take on roles related to your nature of the business. If possible, you may strike a deal to offer them a stake in the business, but that decision rests on you.
If you plan to hire employees and want to retain ownership, just make sure to get the people with the right skill-set and work ethic to help you in your business.