Have a brilliant idea for a product or service that you’re sure the world needs? You’re not alone. More than 500,000 entrepreneurs take the plunge every month, according to the Kauffman startup index.
What that means is that there are lots of great ideas, lots of motivated individuals — and lots of competition. In fact, just 20 percent of new businesses survive their first year, and only one-third of those still exist after 10 years, according to the Bureau of Labor Statistics.
In it for the long haul? Then use these five strategic planning tips to help cement your chances of success.
Step 1: Make it official
Every state establishes different rules and regulations regarding business setup and operation. The choice you make will also affect other small business concerns such as tax liabilities. Before you decide what’s best for you, consult both your legal and tax advisors.
In addition, the specific industry you’re in may require a license from federal, state, or local entities. Finally, professional memberships or associations may offer additional training, networking, or promotion possibilities. A good resource? The Small Business Administration website.
Step 2: Build a network
Business people who have survived — and thrived — are often not only willing to listen but also offer support and insight. And those individuals don’t have to be in the same field; they’ve likely been affected by some of the same pressures, such as finding and keeping employees and market fluctuations, that will impact your business. Build your network and seek out the eyes and ears of those who can help you avoid stumbles.
Step 3: Find support
If you are a woman, service-disabled veteran, or member of a socially or economically disabled group, there may be programs that aim to assist you in qualifying for contracts or obtaining funding. There’s also assistance for businesses located in both urban and rural communities in what are known as historically underutilized business zones. For more information, check out the U.S. Small Business Administration website.
Step 4: Establish boundaries
It may be tempting to use personal funds, especially for startup costs. But as you begin your small business planning, it’s best to slowly create a separate business fund that is, for example, accumulated from side work. In addition, set up a business bank account, business credit card, and separate record keeping from your own personal assets.
Step 5: Protect what you can, when you can
For many small-shop businesses, sick days and vacation days can end up disrupting the normal flow of business. What happens to your business if you suffer a critical injury or develop a serious chronic illness? In addition to health and life insurance, disability insurance may help round out a business financial plan to protect your income. A business insurance policy may also be used to help cover the costs of possible liability claims.