The U.S. Small Business Association (SBA) says that about 30 percent of all businesses fail within the first year, 50 percent fail within five years and 60 percent fail within 10 years. With stats like that, it’s no wonder that many entrepreneurs are nervous about running their new businesses into the ground. To avoid becoming another statistic, make your business succeed by following these four tips for entrepreneurs.
Don’t Risk Your Personal Net Worth
The first think you need to do is get this idea out of your head that somehow you should put it all on the line to start a successful business. Many first-time business owners make this mistake. They overextend themselves by taking out second mortgages on their homes, applying for multiple personal loans and maxing out their credit cards to fund their business. This often ends in financial ruin for both the company and the entrepreneur.
If you want to avoid a Chapter 7 bankruptcy, then don’t take massive, unnecessary risks when starting a business. Take the time to secure financing from investors, or if you want full control and ownership, then start out small and then bootstrap your way to a full-time business.
Create a Budget and Stick to It
Operating a successful business has many things in common with running a successful household. In many cases, creating a realistic budget and sticking to it is crucial for long-term viability of your business. If you are terrible at managing your personal finances, then you’ll be terrible at managing your business finances too. So that means you should hire a consultant or get a partner who can take care of that aspect of your business.
Don’t Make Wasteful Purchases
Many zealous new entrepreneurs waste a lot of money when launching a startup, only to find themselves running out of operational capital within a few months. You need to avoid this. Launch your startup as lean as possible and only spend money where you’ll get the best ROI. If you started out by going on a shopping spree for office furniture and fancy, custom executive stationery supplies, you’re doing it wrong.
Build a Team of Professionals around You
Realize that you aren’t the best person for every single aspect of your business. You must ditch the idea that, “If you want something done right, you have to do it yourself.” That kind of thinking will burn you out in no time. Instead, invest in your team. Learn to delegate, support and lead rather than trying to do it all yourself. You’ll accomplish a whole lot more and multiply your efforts by working together toward your common business goals.
Creating a successful business and avoiding bankruptcy is the goal of every entrepreneur, but some businesses are going to fail, even though their owners seem to be doing everything right. You can minimize your chances of that happening by managing your company finances responsibly, budgeting wisely and focusing on building a team that will lead your business toward success.
Guest author, Dixie Somers, is a freelance writer and blogger for business, home, and family niches. Dixie lives in Phoenix, Arizona, and is the proud mother of three beautiful girls and wife to a wonderful husband.