21 Jan How to Survive Your First Year in Business [Infographic]
You might look at world-famous entrepreneurs such as Elon Musk, Mark Zuckerberg and Bill Gates and believe that they make business management look easy. Yes, they might make it look easy but you can be sure that when each of those started their now all-conquering businesses, they had moments of struggle and made some glaring mistakes. The crux of the matter was that they recognized their mistakes, learned from them and never looked back.
The moral of the tale is that every entrepreneur will face a plethora of challenges in the first few months of managing their business. So it’s about having the acumen and self-belief to meet these challenges head-on and deal with them sensibly. It’s also about recognizing the main reasons why start-up businesses fail. A lot of start-ups go under within a few short months because they didn’t have enough of a cash flow, they expanded too quickly, the owner lacked acumen in a key area of the business or the owner went into business for the wrong reasons.
When entering that delicate first year of business ownership, every entrepreneur must be psychologically prepared for the challenges they will face and must also be financially ready for the inevitable occurrence of tough situations. Let’s look at these two areas in more detail – we also direct you to an infographic below from All Finance Tax.
- Set a quantifiable goal so that you have a clearly defined target to work towards, as the drive to meet this target will spur you on greatly.
- Take calculated risks. You will get some wrong, but so has every entrepreneur. If you’re too afraid to gamble, the company won’t make progress.
- Listen to others, but make the final calls yourself. The advice and support of family and friends can be crucial, although it’s your responsibility to determine between constructive and groundless criticism.
- Embrace stress. This may seem like peculiar advice, but stress is part and parcel of running a business. If you feel stressed, think of it as a sign that you’re operating outside your comfort zone because the business is growing.
- Have at least one year’s worth of savings to call upon, as there will be times when things go wrong and you’ll need to find money immediately for vital expenses.
- Be honest with your partner in admitting that you may need to rely on their salary in the first few months of the business.
- Choose your form of business very carefully. Going down the sole trader route gives you complete control but also makes you personally liable for business debts.
- Although the first year of business is invariably tough, 4 out of 5 start-ups survive for at least a year, so the odds are in your favor.
- Businesses which go bust in their first year usually fail because of insufficient cash flow, poor management, lack of drive or reaching for too much too soon.
- Entrepreneurs must have total faith in their idea and be prepared to go over and beyond to make it work, but a support network of friends and family is vital.
- The stress from taking calculated risks is much better than the comfort of playing it safe and managing a stagnant business.
- No entrepreneur should go into business without having at least a year’s worth of cash flow in reserve for when things don’t go to plan.