Ralph Waldo Emerson said, "Build a better mousetrap, and the world will beat a path
to your door."
But when you're starting your own business, there's no guarantee that
your "mousetrap" is going to survive, especially in today's fast-paced business
world. Nearly half of all small businesses fail within the first two years of operation.
The number one reason for business failure is inadequate planning. The second reason is
under-capitalization.
So before you mortgage your house, or go into debt financing your
business, you need to know if your business is going to do more than survive -- you want
to know if it's good enough to thrive! Here are three things successful businesses that
have stayed in business for five years or longer have in common:
1. The idea. A successful business start-up always starts with an idea.
Something that makes your business stand out from all the rest. So how do you know if
you've got a good idea?
You've probably got a good idea if you can answer yes to any of the
following questions: Does your idea provide the solution to a significant problem for your
target market? Does it satisfy a need or want? Does it create an opportunity?
The most successful businesses either fix problems (either real or
perceived), or they increase your customer's pleasure. They create a repeat need for a
product or service among the target market.
2. The market. Your chances of survival are better if
you can answer the following questions with a yes: Is there already a market for your
product or service? (It's much easier to fill a need than trying to create an entirely new
market.) Can your target market afford to buy your products or services? (If they can't
afford it, it doesn't matter how great it is, you won't sell any!) Will your target market
perceive your product or service as valuable? (If they want it, but don't think it's worth
what you're selling it for, you won't make any sales.)
3. Your ability. Do you have the people, the resources
and the knowledge to be able to consistently provide your products or services to your
target market? Can you maintain a competitive advantage? Do you have enough manpower? Can
you purchase the supplies and materials you need over the long run?
Your first step always is to create a solid business plan. Your
business plan is more than an essay on "Why I deserve to get funding for my
idea" however. Don't spend all the time creating a business plan and then toss it in
the bottom drawer of your desk. Your business plan should be a living, breathing roadmap
that helps you make sure you're on course and reaching the goals that you set for your
business.
The second step to business survival is getting enough financing.
Although the term "bootstrap entrepreneur" describes most small business owners,
having enough capital to be able to keep your business afloat is vital to your survival.
When you're creating your financial analysis of your business, make
sure you're being realistic about costs and expenditures, so that you give yourself the
cushion you need to succeed.
If finding financing is a problem, either because you don't have enough
credit or equity, or there are other problems, take the time to look into the resources
that are available in your community. There are a wide variety of grants and loans
(including microloans) for entrepreneurs, if you know where to look.
Some great resources will be:
The
Small Business Administration
Local
Small Business Development Centers
Women's
Organizations
Local
University or Community College
Chamber
of Commerce
SCORE
(The Association for Retired Executives)
Nonprofit
organizations that work on economic development in your area
Use other
successful business models as a guide. When you're getting started, look around. What
businesses are successful? Why? What is it they're doing that is working? What attributes
do you admire, and why? You stand a better chance of succeeding if you're modeling someone
who is already successful.
Find a mentor. Most entrepreneurs have great skills and abilities, but
no one does everything well. You probably already know what your strengths and weaknesses
are. (If not, there are many resources and tools that can help you figure it out!) Rather
than ignoring your weaknesses, find a mentor who can help you either build your skills in
your weaker areas, or offer advice for getting what you need.
If you take the time to plan to succeed, you could be creating a legacy
that will be enjoyed by future generations, and that other entrepreneurs will look at as a
model for building their own businesses.
