Risky Business: How to Survive Your First Year as a Small Business

by | May 17, 2017 | Business

There are few rewards to be reaped without taking risks, and building a startup or small business is no different. Starting a small business is scary, nerve-wracking, and uncertain. While being an entrepreneur is never a cakewalk, it gets easier once you have an opportunity to learn from experience. The challenge is making it through the early phases, most especially your small business’ first year of life. Every business is different and each will face its own challenges, but there are a few guidelines that can help you shepherd your business to growth and sustainability.

Tips for Getting Through Year One

1. Before investing in your idea, figure out if there is a marketing for it. Speak to the people who you think will love your idea, preferably friends of friends who don’t have a personal relationship with you. Do they like your idea? Search for constructive criticism, not affirmation. An excellent way to get some quick feedback is to promote your idea on social media in advance of starting your business. Spend a little money on Facebook or Google Ads to reach a broader audience. What kind of interest do you get? Look at statistics like click through rates and impressions. Impressions can provide valuable information about the breadth of your market and click through rates can serve as a rough proxy for interest within that market. If your idea is good, your preliminary marketing campaign will be a great way to get a head start on launching your product or service.

2. Stay flexible. The only guarantee about your first year in business is that there will be many surprises. Your target customer base may be different that what you thought itwas, or you’ll end up selling your product through an entirely different channel, or you’ll wind up changing your marketing message altogether. There is some great literature on lean startups, so we’re not going to rehash it here, but if there is one takeaway it is this: Spend your time initially figuring out how to get operational quickly and cheaply. Don’t worry if your website looks primitive or that instead of having a slick and automated salves funnel you’re doing things by hand. Get out there and start ascending your learning curve (read: making mistakes). The less money and time you spend while making those mistakes, the better off you’ll be.

3. Get organized. Starting and running a small business means doing a hundred things at once. Things are breaking, people are complaining, and once your company gets moving, it’s easy to get caught up in the chaos of keeping up. The best thing you can do for yourself and your business is to get organized early, nail down a workflow that works for you, and keep things consistent. Getting processes in place isn’t a virtue in and of itself. It allows you to do things more efficiently and, even better, to automate them. For example, once you have a process for generating leads, responding to hot inquiries, and bringing on clients, you can start thinking about how you can use software to handle some or all of that process. Coming up with a process also allows you to delegate work, which brings us to our next tip.

4. Delegate as soon as possible. When you start a business, operations will seem like the most important thing to focus on. Just conceiving how you will do things, getting them up and running, and then troubleshooting problems will take up all of your time. But to have any hope of surviving in the long run, you will need to focus on a big picture strategy. What is your value proposition and is it appealing to customers? What new markets can you enter? How do you expand your product offerings? Once you have the processes for executing your various business operations in place, you’re going to want to delegate those responsibilities. But remember to stay flexible. Before you hire a full-time employee, think about utilizing a virtual assistant as a potential solution for getting things done without committing yourself to growing your staff.

5. Accept that you won’t be an overnight success and plan accordingly. It always takes longer to get your business up and running—let alone making a profit—than you think it will. Do the best you can to model what your expenses will be and what your rate of growth is. Don’t get too caught up in the details at first; there are simply too many surprises. But at least get a general idea of what your expenses will be and how much revenue you’ll need to get to break even. You’re going to need to make sure that you can sustain the inevitable losses as you get your business off the ground. You’re going to want to make sure that you have some sort of financial buffer to survive the initial lean startup period (the road to profitability will likely be longer than you think). Much of starting a business is a race against time — many businesses will be profitable eventually; the trick is not to run out of money before you get there.

There’s a lot more to starting a business other than these tips, but they provide a starting point for surviving that first, critical year.

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