The first year of life is an exciting time in a new business. Everything is an adventure; you’re reaching fresh customers and building for the future. It can also be one of the most challenging periods to survive.
The odds of your business succeeding depend on your industry. The Bureau of Labor Statistics reports an overall 20% failure rate in the first two years. The good news is 80% of new ventures make it through the beginning stages.
Most entrepreneurs want more than a two-year span, though. If you’d like to set your business up for long-term success, the way you handle first-year challenges can make or break you. Here are the main issues you’ll face.
1. Grow Your Revenue
When you first open your doors, your only customers might be family and friends. Leverage those you know to reach out to additional clients in your area. Ask them to share any posts you make on social media and tell others about your new venture.
Set some realistic goals for the first year. At first, your revenue may not be enough to cover expenses. Are you prepared to not make a profit for six months or so while you build your following?
Make sure you have enough funds to pay rent, employees and other costs until you develop a steady cash flow.
2. Get the Word Out
Grab the attention of people in your community. A bright, new sign grabs attention and draws people into your shop.
Consider the colors on the display. You want to use vivid hues that draw the eye and also contrast against the background. Consider the distance passersby view the sign. If they are in a car, you need bigger letters they can read at a glance. If walking past, you have a bit more leeway.
In addition to signage, join your local chamber of commerce, set up a booth at local craft fairs and take out ads or do direct mail campaigns for neighborhoods surrounding your store.
Even if you’re exclusively online, people like to support local businesses. Let them know why you chose to open your company where you did. Share your story.
3. Manage Cash Flow
Cash flow is one of the top issues all businesses face. During the first twelve months, it can be a particular problem. You have to buy equipment, stock inventory, advertise heavily and pay other startup costs. Your business might be upside down for a few months, which is frightening.
Planning helps avoid some of the problems you might encounter with lack of revenue. An emergency fund alleviates the disaster of equipment breaking and needing repaired or replaced or someone not paying what they owe on a large order.
Pay attention to what you spend and cut costs wherever possible. Careful record keeping is your best friend, especially in the first months of your new venture.
4. Meet Modern Needs
Technology changes rapidly from year to year. More people are staying home and shopping online than ever before. According to Statista, there are 4.66 billion active internet users, and 92.6% use mobile devices to access the internet at least part of the time.
Look for ways to tap into technology and current customer needs. If you serve senior citizens, they may be worried about shopping in a brick-and-mortar store. Offer online ordering and curbside pickup.
Make sure your website and any apps are fully compatible with popular smartphone models. Test them thoroughly for usability. You may outpace the competition simply because you offer convenient ways to shop. Think about the pain points your customers face and strive to solve them.
5. Establish Customer Relationships
Customers feel loyal to brands that offer what they need without any roadblocks. The easier you make it to buy something from you, the more likely clients return for their next purchase.
Your first step to establishing positive customer relationship management (CRM) is how friendly your staff is. Greet people with a smile, go above and beyond to help them solve any issues they have and follow up if possible.
If you serve clients, keep careful track of their preferences. For retail establishments, you can offer email lists for coupons or app downloads. Track what they buy so you can push notifications to them when something similar hits your store shelves.
The adage the customer is always right helps you maintain focus and build a positive reputation in the local community. The more you care about the customer, the better your CRM will be.
6. Finding Excellent Staff
In a recent survey by the Society of Human Resource Management, researchers found the average cost to hire a new employee is around $4,000, but the final number can vary. Since your staff is the face of your brand, you want to spend your money wisely.
You want people who come alongside you and work hard to help you build something lasting. Offering incentives to workers to strive for excellence is an excellent first step. Offer raises as you can and give them perks they can’t find from more prominent corporations, such as bringing your puppy to work day or extra time off to volunteer for causes they care about.
Refine your hiring process so you ask the right questions and know how to read body language. If you feel uncertain in your decisions, invest in a human resource firm and have them do the legwork of finding your next employee.
In your first year, you’ll run into challenges that make you want to quit. Understand there will be unique problems only your business faces. Be ready to think outside the box to find creative solutions. Find a mentor who has navigated the business world before and can offer valuable advice.
Look forward to where you plan to be in five or ten years. The first year flies by quickly. Before you know it, you’ll have learned more than you ever expected and be on the path to a successful long-term venture.
Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the director at a marketing agency before becoming a freelance web designer. Eleanor lives in Philadelphia with her husband and dog, Bear.