Entrepreneurship is like a rocky path that few people dare to follow, and even fewer people manage to navigate successfully. Why you may ask? Because the journey to becoming a successful entrepreneur is not all glitz and glamor, especially during the first year.
Everything takes time and effort, and nobody becomes a millionaire overnight. If you speak to enough naysayers, you may get the impression that 90% of new businesses had no chance of succeeding whatsoever. However, the reality is not all doom and gloom; the US Bureau of Labor estimates that 75% of new businesses make it through the first year, 69% lived to tell the first two years, and only 50% survive the first five years.
Although a 75% chance of success is not very impressive, you do not have to wait and let statistics determine your fate. Here are four tips for surviving your first year of entrepreneurship.
Do Not Shy Away from Borrowing
Having a million-dollar idea and putting together everything you need to implement it is an excellent step in the right direction – but now what? You need consistent cash flow each month to pay your rent, electricity, Wi-Fi, employees, and other expenses.
Whether you are running a start-up or an art studio, you will need some funding to get things off the ground during your company’s infancy phase. While some entrepreneurs are fortunate enough to qualify for bank loans, borrow from family and friends or bootstrap their way to success, most are not. Enter private lending.
Whether you’re in Albany or Albuquerque, loans are available through various private lenders. But perhaps even better, you can secure a loan with a thin or non-existent credit history. That said, always check whether a potential private lender has a credit or co-signer requirements.
Curb Your Expenses
Startups and small companies often fail because of mismanaged business expenses, so it might pay to stay lean until you build a solid customer base. Spend your funds wisely on essential items only, not what you think your company should have. For instance, forgo renting office space until you actually need it and use contractors as much as possible.
Be Customer-Centric
While most, if not all, businesses are driven by a profit motive, one of their fundamental goals is to provide solutions to their customers. Remember, your ultimate goal as an entrepreneur is not to empty your customers’ accounts but to address their pain points.
Understand your customers’ needs and adapt what you offer based on their feedback. Think of consistent sales as a byproduct of providing something that people need and are willing to pay for.
Be Patient
Unfortunately, many new entrepreneurs treat their first year in business as a test year, i.e., they go through the motions to see what happens. This mentality discourages perseverance, and many entrepreneurs close shop after an unprofitable first year.
The harsh truth is that most businesses need to operate for over a year or longer before becoming consistently profitable. One way to survive past your company’s first anniversary is to create a realistic long-term plan, stick to it and accept the fact that your business may need more than 18 months before things get off the ground.
Conclusion
Starting a business is a bold, stress-inducing step towards financial freedom. More companies are likely to survive than collapse during their first year, but the numbers drop gradually until the five-year mark. Nevertheless, do not be afraid to pursue your ideas – stay diligent and be prepared to adapt.
