Starting a business from scratch is not easy. There's a whole culture around startups these days and you'll often hear about “lean startup” or how you only need to work 2 hours on your business and make money. The reality is that you're most likely going to be working far more than two hours a week for a very long time, and even then you're not guaranteed to succeed.
One of life's hardest lessons is that you can do everything right and still fail. Nowhere is this more evident than in the failure rates of small businesses in the United States. About 20% will fail before their first year, more than a third will fail before two years, half will fail in the fifth year and 70% will fail in the tenth year.
Sometimes circumstances are truly out of your control, but there are still plenty of things you can do to secure your business before you even begin.
Failing to plan is planning to fail , as the old saying goes. And, apparently, this is one of the most common reasons for business failure.
You shouldn't just choose office furniture and paint colors during the planning phase. Actually, those things should come later.
First, you need to plan what kind of business will work well, where it will thrive, and who would be the best person to help you run it. Among the things you should carefully consider are the following:
Location :Are you in a place where there is an abundance of talent, relatively low business taxes, sufficient infrastructure for your needs, and room for business growth?
Competition: Can you stand up to the competition or are you in a very competitive industry in terms of market share?
Team: Are you choosing the right people for the job or just taking someone with a resume and a pulse?
Cash Flow Management: Can you handle cash flow ups and downs when customers aren't paying you and you still have to pay rent?
Flexibility: Can you get started in no time if you spot a changing market?
This is where most businesses fail and thinking about how to mitigate these issues from the start is the first step in building a business that lasts.
See also:How Corporate Awareness Can Predict Your Future Success
Four of the five worst places to start a business in the United States are California, Stockton, Modesto, San Bernadino, and Santa Rosa, due to high poverty rates and low levels of education in the regions.
If you find yourself in one of these places, you need to carefully plan your trading strategy.
Location is important, but so is industry. Healthcare is one of the most successful types of businesses to start, while construction and transportation are among the worst.
Does your city have good infrastructure? It will be difficult to start a tech business if you are in a location that still uses a dial-up connection. Shipping things? Hopefully you have access to a major shipping line hub, like UPS Worldport in Louisville, Kentucky.
Access to top talent is another concern when starting a business. If you start a business in a place that doesn't have a university, you may starve to death as your business grows. If you settle in a place where poverty is high, there is a good chance that the people who need a job the most do not have the necessary education.
Take a look around as you plan your business and determine which industry is right for your location. Don't be afraid to move if you can't get what you need in your current community.
See also:4 Key Ideas to Help Your Passionate Business Take Off Fast!
A little extra planning can go a long way when starting a business. Find out why businesses fail from this infographic, then do a serious audit of your business plan or current business.
Have you built something that can last or something that will barely survive the next major market shift? Does your team measure up? You owe it to your business to ask the hard questions.