Here in the United States, small businesses are the lifeblood of the economy. In fact, a full 99.7% of businesses here have fewer than 500 employees. With numbers like those, it would seem that almost anyone can successfully start and run their own company. In reality, however, most Americans choose the stability of a salaried position over the risk of striking out on their own.
In truth, it’s difficult to blame them. Despite the fact that the overwhelming majority of U.S. firms are small businesses, it’s also true that seven out of ten businesses will fail within ten years. That means budding entrepreneurs face a mountain of risk when leaving a steady job to start a business, and the consequences of failure can be enormous. To help, here are four things to do that will improve a new venture’s survival rate and help smooth the transition from employee to self-employed.
Examine Your Reasoning
One of the biggest reasons that new ventures fail is that they are entered into for the wrong reasons. It’s all too common for a would-be business owner to make the leap because they’re frustrated in their current position, and not because they’ve got a solid business idea. Even in situations where the core idea is sound, however, enthusiasm (and therefore effort) will soon fade if the motivation is illusory. That’s why the first step in making the decision to leave a job to start a business is to figure out why you’re doing it in the first place. If you truly believe that you’ve got an innovative idea for a new product or service, or even if you’re simply filled with a passion for a cause and you want to make a difference in the world, there’s a good chance you’ll do what’s necessary to stay the course and succeed in your new venture.
Network First, Act Later
It isn’t easy to fully appreciate what it takes to start a new business without having already done it at least once. Most new entrepreneurs make the mistake of taking a go-it-alone, effort trumps all approach that rarely works out. The reality is that even the smallest of businesses will need to rely on a network of suppliers, vendors, and contractors to operate efficiently, and it’s better to make those contacts before beginning operations. The same holds true when it comes to recruiting talented staff to round out the new business’ team. If you’ve already built a solid network of contacts in advance, you won’t need to waste valuable time and effort doing so when the new company is already burning through startup capital.
Create a Business Plan, Not a Marketing Document
When setting out to start a new business, most people place great emphasis on creating a business plan that will impress potential financial backers – with good reason. After all, businesses require funding and investors want to know they’ll stand a decent chance of seeing returns. Unfortunately, it’s all too easy for new entrepreneurs to lose sight of the fact that they’ll need to execute the items in their business plan, and that they should be focusing on what will work rather than on telling potential backers what they want to hear. To make sure that’s the case, keep every phase of the plan manageable, and make sure all financial projections are conservative so there will be some breathing room as you proceed. Remember that a business plan isn’t a static document – you’re going to end up revising it several times as you judge your actual results against your expectations, so there’s no need to go overboard in the early stages.
Prepare to Adapt
There is one thing that is certain to happen when starting a new business and it’s that almost nothing will go to plan – at first. For those leaving the security of a salaried position for the riskier path of business ownership, it can be disconcerting when you first realize that much of your time will be occupied putting out the various fires that will no doubt start as you begin your entrepreneurial journey. The natural reaction would be to panic a little and rush to make the quickest decisions you can in the face of the pressure you’ll face, but that’s not the right way to handle things. Instead, you should be prepared to take your time to think through problems when they happen so you’ll come up with the right solution, rather than the expedient one. It’s critical to recognize that a business is like a living organism – and acting in haste can lead to unfortunate outcomes.
Act Without Fear
Although starting a business (especially for the uninitiated) is a monumental challenge filled with pitfalls and difficulties, it is also one of the most rewarding experiences one can ever have. When done well, the benefits will far outweigh the risks in almost every case. If you do your due diligence in advance and understand what will be required to create a thriving business that will stand the test of time, you’ll have every chance to defy the odds and end up succeeding in your enterprise. As the Latin proverb says, fortune favors the bold – so prepare the right way and execute your vision without fear of failing, and you most assuredly won’t.