I will never forget the lesson I learned in my first offline business (partnership) during my undergraduate days.
It’s simple and straight to the point; “NEVER EVER start a business in debts.”
Myself and some of my close pals back in school started a computer training business where we taught Autodesk Inventor, Forex trading, Desktop publishing, Photoshop, etc.
We were making some kind of little profit and struggled to scale through the first year.
Long story short, at the middle of the second year, we were out of business. So quick? Don’t judge yet, that was our first entrepreneurial endeavor.
Entrepreneurship is not easy, anyone who is trying to make it look less difficult than it is, is not showing you the complete picture.
It starts with asking yourself these 10 soul searching questions when starting your business.
The thing is, you need to know if you possess the key qualities of an entrepreneur, if you don’t, stay away from business!
True, the job of an entrepreneur is to make mistakes, but if you don’t have the solid plans, passion and drive to keep pushing, you will get stuck sooner or later.
Did you know?
- 2 out of 3 businesses struggle to survive for at least 2 years
- Half of businesses make it to the 5 year mark
- 1 in 3 businesses will be active for at least 10 years.
Common Reasons For Business Failure
The majority of small businesses will struggle to survive the first year, but those which fail tend to make a few common errors from the very beginning, which result in them going out of business.
Starting the business for the wrong reasons (e.g becoming very wealthy, being your own boss, believing you’ll get to spend more time with family)
Business failure starts with not understanding the types of business structures availble. Other common reasons for business failure include;
- Lack of structured planning
- Insufficient cash flow
- Based in poorly-chosen location
- Poor business management in areas such as finance, selling and marketing
- No website or inadequate social media presence.
Practicable Tips to Survive First Year of Business
So, how to you survive the first 12 months of business? Let me share with you real life practicable tips.
Never Start a Business In Debts
Borrowing money to start a business is in most cases not the best option.
If you’ve once studied economics, the first place a sole proprietor looks to fund his business is personal savings. For a partnership business, it is partners contribution.
Yes, my pals and I contributed some funds but it was insufficient to even kick-start the business (I’m sure you know how students hustle to get money).
We took a loan that has a choking interest rate and that was how we started digging our own graves from day 1.
Is stupid the right word for us? Well, I’ll disagree, we never thought about the possibility of failure.
We assumed we were going to make profit from day 1, that everything was going to be smooth, but we were wrong.
Lesson: Learn how to save and ensure that you have at least 1 year of savings before starting your business.
You will have have numerous startup costs and it’s unlikely you’ll make reasonable profit in the first year.
So, NEVER, EVER start a business in debts.
Have a SMART Business Goal
So we opened for business, it was thrilling, nice office space, cool breeze, etc. But we had no specific set goal.
If I were to do it over again, my first goal will be to make sure people (our target audience) know we exist in our chosen location.
It was so funny that after months, some students still come in and ask “what exactly do you do here“
That will take me to the next tip but what’s the lesson here?
Lesson: In your first year of business, set yourself a clear, quantifiable goal that you can define in a sentence.
For example, I want to have an average of 5 customers per week (depending on your biz), I want to have 1,000 visitors per day to my website, I want to grow my social media audience, etc.
Without a clear goal, you won’t know what you’re working towards and you won’t have the same motivations as if you had a succinct goal which makes success or failure easy to determine.
Have a Purposeful Marketing Goal
Marketing is one big and important part of any business.
In simple terms, marketing is all activities involved in getting your business out there, and getting people to do business with you.
Fliers and banners are the most common options back then, but we failed to use the power of the internet to target audience in our location.
What is your marketing goal? Is it to make your target customers know that you exist? Or to make them realize you’re giving value for half the price of your competitors? Or to make people test your service/product so that they will be convinced to do business with you?
It was a learning process for me back then, but I wish I knew better. I skipped lectures and would rehearse what to teach potential students who aren’t aware of our business. Funny right?
Lesson: Let people know you exist, think about ways to market your business, use the internet, let them have a taste of your product/service with no cost attached, etc.
If you your business is not known, no profit will ever be made.
Don’t be afraid to enlist help. Seeking the advice of others doesn’t deprive you of having the final say.
While other perspectives are good to have because, try as you might, you can’t be a specialist in every facet of managing the business.
There are people already in that line of business you’ve chosen, watch them, seek their advice, have mentors and life will be lot easier.
Cultivate a Saving Habit
Ensure that you keep sufficient capital at your disposal so that you can instantly pay for unforeseen expenses.
You may need to repair equipment that may develop faults and they quite likely will.
Every business will definitely experience such unplanned occurences, so how will you handle it if you haven’t planned for it.
One of the best ways to prepare for this is to save certain percentage from the profit you make per sale of your products and services.
For example, last year, Oasdom.com experienced series of hacks last year, about 3 times which really affected our traffic real big.
Thankfully, we’ve accumulated savings from each sale of product or service rendered, and we handled the situation with funds.
Lesson: The money you save will save you.
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