Entrepreneurs know that the first years of a business are dangerous times. Between 2005 and 2012, survival rates for businesses founded in 2005 hovered around 45 percent on average, with significant differences based on industry. That is a failure rate of more than 50 percent, a daunting number for any business owner to overcome.
Every business is different – competition exists for that very reason. Not every company can approach success in the same way. Some will have to work on refining a product, while others must increase the attractiveness of a service. Some companies need to manage a physical storefront, while others will be almost entirely concerned with marketing a web service and building an online presence. A company’s size, location, and culture all affect their decision making.
Taking these differences into account, here are several keys to making your own unique business last.
Whether you are releasing your first product, opening your doors for the second time, or creating the 20th service package offering for your clients, time and place remain vital considerations. Time refers to when you release your new value offering. A new business can achieve immediate success by opening at the right time. Each new product or service needs to be released at the proper time in order to keep the company flourishing. Competitor product releases, major market events, recessions, and other forces can all render a product release ineffective and doom a company. Wait until customer demand and availability are both high. Wait until the market is free of distractions, until prices are low, and until your product is affordable. Sometimes holding back for weeks, months or even years can make all the difference. This is true of products, projects, or the expansion of your business.
Place naturally refers to where your product or service is released. Online companies should announce their releases or promotions on the right networks, sites, and forums to attract target audiences. If you need an office or storefront, choose an area that balances maximum exposure with minimum costs. Location is directly associated with long-term business success, so be prepared to spend more on a prime spot.
An Addictive Customer Experience
Whatever your business, bringing customers back over and over again needs to be your focus. Make the service so refreshing and entertaining that customers simply won’t want to consider your competitors. Provide information consumers can use but cannot find elsewhere. Give your product that one feature that everyone immediately realizes they want. Creating an addictive customer experiences is the heart of a successful business model because customers drive your profits. This is where the true spark of ingenuity and real brainstorming become necessary factors in business creation.
A United Front
Internally and externally, your employees must act as one. As a leader and owner, you need to wisely delegate responsibilities but also listen to employee input. When it comes to customers, every employee should understand the company culture flawlessly and always deliver when it comes to your brand and message.
Excellent employee training and a close-knit business community can help achieve this goal. Small businesses that start out with flat organizations where everyone is willing to work with everyone else tend to outlast companies that frame themselves with a culture of bureaucracy. And while working on internal collaboration, do not forget to partner with other small business owners in your area!
Sustainable Profits in Inclement Times
Hard times come and go. The majority of small businesses fail because they cannot survive rough patches when customers dry up, competitors emerge, or costs rise. This is especially true of seasonal businesses that may not have enough funds to live through the off-season – often discovering their predicament when it is far too late to correct.
Plan your business to keep profits flowing during bad times. If you are seasonal, build a model that includes products for the off-season. Include low-cost service packages and deals for customers that care more about savings than elite features. Avoid unnecessary expenses in every department – integrate frugality into your business culture to survive the lean times.
Without good debt management, few small businesses will last beyond their first few years. Part of the process is dealing with your own loans and lines of credit. You need to start out with strong credit to attract investors and banks, and then continue to maintain trustworthy credit during the rocky first years. This delicate balancing act varies according to industry and situation. Start by studying debt leverage, equity ratios, and other statistics common to successful companies in your industry to find out what asset/liability levels are ideal. Avoid rash decisions and sudden expansions that cut into your debt balance.
The smaller part of debt management concerns how you give credit to customers. Create a flexible, sturdy credit policy that allows you to draw in the maximum amount of customers with the least amount of defaulted debt. Again, benchmark data can provide valuable clues.
Reduced Marketing, Supply, and Communication Costs
If a small business cannot manage initial costs then expenses are bound to become uncontrollable down the road . Low-cost models are key to longevity, so start saving money and continue the practice. New small companies are lucky in that they can use sophisticated digital software to manage what was once costly and time consuming. Social media marketing can reduce advertising costs and bolster consumers outreach. These digital freebies can save a business from unnecessary expenses during the first few years, setting the stage for new growth.
In business eventually everything changes. When creating a business model with longevity in mind, you need to understand that nothing lasts forever – including products, industries, even your motivation. Make a mission statement that will outlast the tech that you use as well as the products you sell. Imagine a future where your industry is no longer needed, then plan how your business can adjust. Be prepared for constant shifts in investor interest, technological evolution, and market demands. A small business’s longevity will always depend upon a work environment that embraces change in order to preempt competitors and obsolescence.