Starting a new business is no easy feat, especially in today’s competitive market. There are already so many small businesses and entrepreneurs out there trying to make a name for themselves that it can be hard to find something new and unique to offer that makes your business stand out.
Even if you corner the market within your niche, there is no guarantee that you will have success. Every entrepreneur wants their business to succeed, but statistics show that around 20% of small businesses fail within the first year, and that number jumps to 50% after five years.
Still, even though there is no guarantee your business will succeed, there is also no guarantee it will fail. There are various reasons why many small businesses do not succeed, but it can generally be narrowed down to a select few factors. This article will take a look at some of those key factors that can make or break your business.
Key Factors to Consider When Starting a Small Business
Running a new business is an exciting venture. That’s not to say it’s not stressful or tiring, but there is generally a certain level of joy and fulfillment that comes with opening a new business after all of the time and effort you’ve put into getting it up and running. However, it’s important not to lose sight of things amidst all the excitement and chaos.
Just because you have something that looks good does not necessarily mean the numbers will all work out. Even after you’ve opened, it’s important to continue putting in the effort to ensure your business experiences growth and success well into the future. The following key factors play an important role in the success of any business and should be given careful thought to avoid common mistakes that can lead to failure.
1. Risk Management
All businesses come with risks. Every decision you make carries the potential to help you succeed or set you back. This is why small businesses need to develop a solid risk management strategy to help them better plan for and navigate any potential bumps in the road.
Every business deals with the same basic risks, but some risks may come about that are specific to your business. So minimal planning for those basic risks will generally find you struggling. There is no one-size-fits-all method or approach to managing risks, which is why every small business needs to give careful thought and attention to risk management to develop a strategy that works best for them.
This can include identifying risks ahead of time and developing a plan for how you will handle any potential hurdles or setbacks, as well as creating a team that is adaptable and quick on their feet to handle last-minute disruptions for the things that are unpredictable.
2. Business and Growth Plan
One common setback that small businesses face is unexpected growth. All entrepreneurs hope to succeed and may consider the basic concept of their business doing well and expanding, but many don’t initially plan for that growth and expansion, so if and when it happens, they are often unprepared and unable to handle it.
Scaling and growth should always be a part of your initial business plan. Understandably you may not want to jump too many steps ahead and put the cart before the horse, as they say, but it’s still important to have some sort of plan for if and when the time comes.
3. Employee Training and Benefits
Small businesses generally do not start with that many employees, which means the few people you do have on your staff need to be adequately trained to make the most impact. One of the biggest setbacks new businesses face is not hiring the right people or not sufficiently training them to handle the start-up environment.
Most people prefer to get in with a company that already has its ducks in a row and knows exactly what it’s doing. However, it can be just as exciting and fulfilling to be a part of something new. But if your staff isn’t trained or prepared to handle the hurdles that most new businesses face, you may find it hard to hold on to them.
Ensuring you hire the right people and giving them adequate training can better help you succeed and face whatever comes your way. But it can also be beneficial to provide a quality benefits package, especially in the small business and start-up environment. Developing a positive company culture and a team of creative, hard workers requires a good benefits package to entice them for when things potentially get rough.
4. Consumer Research
Customers are another key element to running a successful business. Many small businesses will simply assume that their products or services will find the right people because of what they are specifically selling and who they think it’s for, but not having a thorough understanding of your target audience is a big mistake.
Consumer research is essential if you want to better position yourself in the market and develop a loyal customer following. If you are aimlessly targeting customers without a specific persona or consumer profile in mind, your marketing will likely fall flat and miss the mark. So, always, always, always, research your target consumer base to better understand who you are selling to and how to reach them.
5. Cybersecurity
In today’s digital age, cybersecurity is vital if you want to protect your business and avoid threats that can set you back or run your business into the ground. Every business, especially small ones, should have a cybersecurity response plan. Unfortunately, many small businesses assume that they can fly under the radar because they are new and small, but this is far from the truth.
Cybercriminals look for weak spots and vulnerabilities, which make small businesses a prime target because they generally don’t have good security like bigger companies do. So developing a quality cybersecurity response plan and utilizing the latest tools and technology to protect your business, your employees, and your customers is necessary.
6. Website Content
Whether you are a home-based e-commerce business or not, you need to have a good website. Your website is like the foundation or central focal point of your business. It’s where you are essentially driving your customers so they can make purchases or learn more about your company and whether or not they want to do business with you.
If your website content is inaccessible and not user-friendly, it can hurt your business. Simply creating a basic website is no longer sufficient. Small businesses have more success when they have a website that is easy to access, has valuable and helpful information, and a quality UX design.
7. Location
Location is a factor that is often overlooked but can play a huge part in the success or failure of a business. Small businesses especially should be mindful of where they set up shop because they tend to have a smaller reach. So you want to be in a location where you can attract as many customers as possible.
Opening a business in a more urban city location can have its positives and negatives, but it is generally better for small businesses because it puts them in a prime location where they are more likely to get more customers because of the dense population. Entrepreneurs who open their businesses in the city also have access to a larger talent pool when it comes to finding quality employees.
On top of all that, bigger cities also tend to offer more business grants and loans to small businesses. Cities are always looking for ways to foster economic growth and attract new businesses and residents, so offering loans and grants to small start-ups is one way they can do this. Even if your business isn’t offered a loan or a grant, being located in the city comes with many advantages and opportunities for growth.
Wrapping Up
It’s easy to come up with an idea for a new business, but executing your plan and running a business takes hard work. Even if you follow a certain formula for success, there is still no guarantee that your business will succeed. So small businesses must follow as many tips for success as they can and develop a solid business plan that carefully considers all of the factors above and more. If you want to succeed in today’s market, you have to be willing to go that extra mile to stand out above all the rest.
