On average, 600,000 businesses open in the United States each year. According to the Small Business Administration (SBA), only two-thirds of those new companies will survive longer than two years, and half will have closed their doors within five years. While those numbers do act as a word of warning, hundreds of small businesses are successfully planned, founded, and continue to thrive for years to come. To help your company reach soaring heights, it's important to strategize from day one.
Use our infographic and an in-depth look at the key points below to help you start your new small business on solid ground.
Step 1. Create a Business Plan
The first thing you should consider when starting a small business is a watertight business plan. This document goes beyond your personal planning. A strong business plan will help champion your vision to potential investors, lenders, and others who can provide invaluable support in your company's earliest days.
Here are key elements for your business plan:
- Executive summary: Include 4 to 7 reasons why your company will stand out from the crowd.
- Company overview: What will your company do? Provide a concise profile and determine the legal entity form your business will take.
- Management team: If you've already done preliminary hiring or are entering the industry with associates at your side, you can list your key personnel and their professional qualifications.
- Industry, customer, and competitive analyses: Show that you've done your research. These analyses should offer statistics about your target audience, a profile of your intended demographic, and the leading companies you'll be going toe-to-toe with and why your business has the upper hand.
- Operations and marketing plans: Provide detailed information about your internal operations, including your goals, strategies, and KPIS, and outline how you plan to attract consumers with in-depth marketing strategies. Your business model will change over time, reviewing KPI’s frequently will help you determine how successful your plan is and will allow you to decide to drive operations or marketing harder. The more frequently you review your KPI’s the faster you will understand the results of your decisions.
- Financial plan: State your short-term and long-term revenue projections, and include any existing sources of funding.
Step 2. Obtain Your Funding
Once you've created your business plan, the second step is securing the funding to launch your small business. While having accumulated savings is an obvious benefit, you may also want to reach out to investors and banks for additional sources of financial assistance. While Census data shows that 40% of small businesses were opened for under $5,000, if you require specialized machinery like many bakeries and restaurants, spas and salons, machine shops, and other businesses, those numbers could easily skyrocket. Project wisely to pursue and secure the full amount of funding you'll need to succeed.
Step 3. Prepare to Open
When your finances are in order, it's time to prepare for your grand opening. Secure a space, and set up your equipment, technology, and the atmosphere you imagined. The company's premises should look picture-perfect for both your employees and future clients. Hire the additional staff you'll require to get off the ground, and start training.
Now is also the time to secure the insurance you'll need to protect your business from the biggest risks, especially in the first, most vulnerable years after opening. Reach out to AmVenture Insurance Agency, Inc. to design a bespoke insurance solution that can help protect your new business from liability and other exposure.
Step 4. Market Your Business
In today's world, if you build it, there's no guarantee they will come. To bring in customers and create a loyal client base, you must create an effective marketing strategy. Take the time to build a modern, mobile-friendly website, foster a social media presence, and get involved in your community. After you open, monitor the latest small business marketing trends and adjust accordingly so your approach stays ahead of the curve.
Remember, opening a new business is always a gamble. Joining that lucky third of successful small companies that make it beyond five years starts with your foundation. If you have an exciting and original idea for a business, create an ironclad business plan, commit to your goals, and follow the rest of our advice above to help success.