If you’re interested in maximizing your wealth, leaving a legacy for your children, or just seizing more control over how you work on a regular basis, starting a small business may be your best career opportunity. Startups and small businesses are the lifeblood of a strong economy, and are incredible financial opportunities for the entrepreneurs starting them.
However, starting a small business can also be challenging. Roughly half of small businesses fail within the first five years of their founding, and even if you succeed, the life of an entrepreneur is often a stressful and time-consuming one. Fortunately, there are some tips that can help you be successful with your first—and potentially only—business.
Important Tips for First-Time Small Business Owners
Follow these important tips to get your business started with the highest probability of success:
- Be ready to fail. Remember, the rate of business failure is high, and even if your business survives for many years, you’ll inevitably fail with one or more smaller components of managing your business. What’s important isn’t whether or not you fail (because you almost certainly will), but how you respond to that failure. Will you learn from it and move on, or admit defeat and dwell in the past?
- Choose the right business structure. Many new business owners want to start a sole proprietorship or a partnership because those business structures seem easier. However, it’s typically recommended that you incorporate your business or create an LLC. These business structures serve as separate legal entities, providing you (and any other founding members of your business) with liability protection.
- Spend time on your business plan. Your business plan is one of the most valuable documents to your business, and many entrepreneurs either rush through it or neglect it entirely because they see it as superficial and unnecessary. Business plans aren’t just blueprints for how to develop the business; they’re also your opportunity to learn more about your business environment, including your competition and target demographics. The research you do here will follow your business for years.
- Expect your idea to evolve. Few entrepreneurs end up with the business they pictured in their mind when they first came up with the idea. Instead, the best businesses are the result of a natural evolution. As you learn more about how to run a business and as the landscape around you changes, your business should change accordingly.
- Don’t hire employees right away (unless you have to). Employees are a major expense for your business, and can be a major contributing factor to your success. Take your time when it comes to hiring them; hiring too quickly could leave you with an unqualified candidate or could exhaust your business’s budget prematurely.
- Grow at a deliberate pace. Similarly, be careful how you grow your business. If you grow too slowly, you won’t generate enough revenue to sustain your profitability or get you closer to your long-term business goals. But growing too quickly can also be a problem; if you invest too much, too fast into new buildings, new employees, and new products, you run the risk of wasting that money. Instead, strive to grow at a deliberate, steady pace.
- Choose cost-effective marketing and advertising strategies. Marketing and advertising can be expensive, but it’s also necessary. These strategies are your best bet for generating more business exposure, and without them, you’ll struggle to get new clients and customers. However, you shouldn’t spend money recklessly; instead, seek the most cost-efficient marketing and advertising strategies you can find. Inbound marketing strategies tend to be effective here, such as content marketing and search engine optimization (SEO).
- Work with a mentor. Finally, try to speak with a mentor (or several) if you can, on a regular basis. Mentors are there to guide you, answer your questions, and provide you with insights they wish they’d had when they were first starting out as entrepreneurs. That doesn’t mean you need to do everything they say, but their perspectives can be enormously valuable.
Knowing Your Long-Term Goals
Here’s one bonus tip for you: know your long-term goals. What are you ultimately hoping to get out of this business? How are you going to handle things at the end of your life, or at the end of the business’s life? There are many possible exit strategies to consider, including selling the business to a larger company, retaining your ownership stake but stepping down, passing the company to your children, or appointing someone from within as the new CEO. Determining your bottom-line goals early on can help you build and develop the business in a way that makes this outcome more likely—and more valuable to whoever’s around at the end.