Before we get to our start-up tips, know that your odds may be better than you think. That oft-quoted Bloomberg “80% of start-ups fail within 18 months” is more of a scare than a stat. A quick check of the U.S. Bureau of Labor Statistics puts the failure rate between 38.8 – 45.1% within the first 4 years.
So, how do you end up among the 54.9 – 61.2% that go on to become viable businesses? Here are some start-up tips collected from successful companies and experts to get your business on its feet and keep it there:
- Make sure you have a market. Of all the start-up tips, this may be the most important. A recent study, conducted by market researcher, CB Insights, found that 45% of failed start-ups had a product without market demand. “Build it and they will come” may have worked in Field of Dreams, but this is no movie. You love your product. But who else does? Work to get some advance orders lined up. If your audience isn’t opening their wallets after viewing your demo, you may have a problem.
- Have a plan: You need a roadmap as to how you will develop, market, sell and service your product. Want to be taken serious by a potential investor? Show them your plan, complete with sales forecasts, break even analysis, growth and exit strategy.
- Build early cash flow: Cash flow is oxygen for your business. Drive home some early sales. Don’t fall into the 100% trap of perfecting your product. Sell a module, or sell some development services; find a way to get some steady cash in the door.
- Find a partner; build a team: Don’t try to go it alone. But choose your partners carefully. Define the skills you have in-house and those you need in your business plan. Where are your gaps? What connections do potential partners have? Make sure you find someone who is energized and ready to do battle alongside you to get your start-up on its feet.
- Get an office: You need to have a place to do some serious business. And you don’t have to break the bank to get it. Find a serviced office with resources and connections into the community. That way, you’ll get more than a desk and a door.
- Network the right way: This is where a good office environment can help. Who are the local movers and shakers in your industry? Where do they network? Mixers, seminars and other events can be time well spent. Just make sure they are chocked full of the people you want to do business with. Beer buddies at your favorite watering hole; maybe not.
- Get funding: One of the consistent questions on Shark Tank is about “previous successes”. If you are interested in attracting venture funding, make sure you have some business under your belt. The best PowerPoint in the world won’t get results if you can’t show results.
Above all, don’t be afraid of failures. You’ll have plenty of them. As John Maxwell wrote in his best seller “Failing Forward”, “In life, the question is not if you will have problems, but how you are going to deal with your problems. If the possibility of failure were erased, what would you attempt to achieve?”
