If you’ve recently decided to launch a business, you’ve probably heard all of the horror stories that people share about companies going bust within a year or less. While it’s true that a lot of ventures don’t make it as far as they could, the truth is that there are still plenty of businesses out there that accomplish incredible things during their time in the market.
All you need to do to make sure that you’re not one of the companies that end up struggling is put a plan in place to ensure your survival. Here are just some of the things that you can do to improve your chances of a better initial year.
1. Create a Business Plan
It doesn’t matter whether you’re looking for a bank loan or an investor, you’re going to need a business plan if you want to convince people that your company has legs. A business loan is an end-to-end insight into what you plan to accomplish with your organization, including the problems you plan to solve, and how you’re going to remain profitable.
Your business loan doesn’t have to be too in-depth, but it should provide enough information to guide you during the initial stages of building your company. For instance, your business plan must highlight how much money you need to make in the first year to be profitable.
2. Handle Expenses Carefully
The most common reason for a business to fail is that it runs out of money. When you don’t have any capital to put into materials and new opportunities, then your business just can’t thrive. With that in mind, it’s essential to keep your costs as low as possible until you have more profits coming in. Avoid hiring employees wherever you can and use freelancers or contractors to save on office space.
When you do have extra money in your bank account, make sure that you reinvest it back into the company, rather than giving yourself a bonus. Though it’s hard to get by on a short income for a while, it will be worth it in the long-term.
3. Develop your Credit Score Before You Get A Loan
When you get a loan for your first business, your company won’t have any presence in the market, which means that the bank you work with will need to offer an interest rate based on what they know about you. As the company owner, it’s your assets and financial standing that will come into question when getting your loan. That means that if you have a poor credit history, you may struggle to get a good deal.
If you’re not sure that your current credit will give you the kind of loan you need, focus on building your financial health or looking at an alternative bad credit option before you launch your business. This way, you won’t have to pay as much as interest as your venture begins to grow.
4. Focus on the Most Valuable Projects First
The more time you spend growing your company, the easier it will be to branch out into new projects and ideas. However, when you’re just getting started, make sure that you are prioritizing the projects that put the most money back into your business. Choose to work with clients that you know will pay you immediately, even if the work you do for them isn’t as fun as the work you can do elsewhere. Remember that the focus at the beginning is on building a profitable network of people you can rely on to pay your bills.
Speaking of building a network, make sure that you concentrate on developing good relationships with the repeat customers in your community. Provide them with excellent service and support, even if that means investing in extra employees. Ultimately, the loyalty of your customers will pay off later.
5. Measure and Adapt
Finally, in the early days of your company, resources are bound to be tight, so it’s important to make sure that you’re budgeting as carefully as possible. Make sure that you’re spending your time and cash in the right places by evaluating your strategies and making adjustments whenever necessary.
A bookkeeper can help you out with figuring out where you should start improving your cash flow. However, you’ll also be able to make decisions based on analytics like “Return on Investment” too. Make sure that for every dollar you’re spending on the business; you’re getting something in return.