Starting your own business is the dream of many — freedom from the corporate rat race and building something that belongs to you is a siren’s call. Starting a company is easy, but succeeding with a startup is hit or miss.
About 20 percent of businesses fail in their first year, and another 10 percent fail in the second year. If you want to be part of the group that survives, you must think through how you’ll handle challenges and develop the qualities of a successful business from the minute your idea is born.
Let’s follow Sally Startup as she goes through her first year of business to learn the 12 qualities of successful startups and apply them to your own company.
1. Good Employees
Employers report that finding and keeping good employees is a challenge in the current economy. Think about how much money you lose by finding and onboarding new employees only to lose them to the competition. You must then start the process all over again and find and train another worker.
Around 13 percent of small-business owners say recruiting and retention are their top challenges. A startup can’t compete with a big corporation, but you can offer perks larger companies don’t. Invest in your employees professionally and personally. Let them bring their dog to work or provide a paid day off where they can go out and volunteer for a cause they believe in.
Sally thinks outside the box and talks to local colleges about top students getting ready to graduate. She brings them in as interns and makes a job offer to the ones who seem to fit best with her business model. She invests time in additional training and offers them perks they wouldn’t get from the bigger companies, such as half-day Fridays and bring-your-dog-to-work day.
2. Cash Flow
Cash flow is one of the most significant problems small businesses face. One major catastrophe and your company may come crashing down. It’s also a problem when your business snowballs and you need cash to expand.
Think about the ebb and flow of the seasons and which times of the year you’ll be busiest. How will you get through the leaner times? You might put aside some of the surpluses from when you have heavy traffic, for example. Although a line of credit might save you during the hardest times, be cautious about taking out too much credit, as it increases the number of payments going out.
Sally knows January and February will be slow months for her online retail startup. She plans and banks most of her profit from Black Friday through the first of the year to cover the slower months. She also ramps up some marketing campaigns and sales to stir up a bit more business after the beginning of the year.
There are so many tasks to complete your first year, and things can seem overwhelming. Train your staff to be as productive as possible no matter what their surroundings. Startups sometimes get their beginnings in someone’s home or a shared office. Busy co-office space is challenging because of the many distractions from such environments. Make sure each person has their own area, so all their essential paperwork is in one location. Ideally, they can go to this spot and not be interrupted by others, allowing them to focus on their work.
You’ll also want to designate break spaces so work and social time is separate. Where do meetings occur? Think about where a small group might be able to have a loud brainstorming session without disrupting the workflow of everyone else in the office.
Sally’s offices are in a shared workspace with other small-business startups. She talks to the owners and secures one corner of the room so her staff can all work close to one another. She trains them to go to the break room for personal time and pays a little extra for a meeting room in the mornings.
Since Sally owns an e-commerce store, she knows her success hinges on whether or not people visit her site. She thinks about the audience she’d like to reach and does some research on that demographic. She discovers most of them hang out on Facebook, so she creates content geared specifically to that audience and pays to boost her posts, targeting the exact people she wants to attract.
Other things you can do to drive traffic to your site, besides offering relevant content, include using focused keywords and asking friends and family to share links to your site. In the beginning, most of your customers will be people you know. Over time, your audience will grow through word-of-mouth and advertising. Take any promotional opportunity thrown your way that also aligns with your company values. Give interviews, make an appearance at a local event and pay for advertising as your budget allows.
As a new business owner, it’s impossible to know every aspect of running a startup. Having mentors who’ve gone before you and will guide you is vital to your success. Get to know the other companies in your building and ask the owners for advice. Seek people you admire and ask them to mentor you. Join an organization with experienced business owners and listen to what they have to say.
Sally realizes she is green when it comes to running a startup. She hires a business coach to guide her in the day-to-day refinement of her overall operations. Sally also joins her local chamber of commerce, where she connects with more experienced business owners. Sally attends every meeting and listens during the workshops so she can learn from those who’ve gone before her. She’s able to connect with a local business owner who offers her advice on making it through the hard times.
6. A Story
What is the story of your business? The most successful companies have a compelling story and share it. It defines who you are as a business and what your mission is. Around 92 percent of consumers say they want brands to create ads telling a story.
Sally wanted to start an online store because she raised five children and could never get out and go shopping. She wants to make the process easier for her customers so they can enjoy their family time without the struggles she had. Sally creates a video explaining why she started her company and what she hopes to offer others. She connects with working moms and increases her customer base.
No matter how much planning you do, something will not go according to plan, and you’ll need to shift your focus and make changes. Flexibility is a must for new startups. In the beginning, track every bit of data you have available. Every quarter, decide what is and isn’t working for your brand and make any shifts needed to move forward.
At the end of the first quarter, Sally pulls up her website analytics. She realizes 90 percent of her traffic comes from Pinterest, even though she’s spent most of her marketing dollars on Facebook. She pulls some of her planned marketing funds for Facebook and puts them into more Pinterest content and advertising. As a result, her second quarter starts with more revenue than she’s seen in the last three months.
As the owner of a startup, you must be decisive. While it’s smart to mull over big decisions, don’t think them through so long your brand suffers from the delay. You must learn to factor in the data and then trust your gut instincts. You will make mistakes along the way, but you’ll also learn from them. Part of the growth process for startups is failing and moving forward anyway.
Sally needs to decide whether she should rent permanent office space and get her startup out of the shared environment. She makes a list of pros and cons, crunches the financial numbers and keeps going back and forth between yes and no. After three weeks, she finally decides she truly needs her own office and calls the leasing agent. Unfortunately, someone else rented the space last week, and she must start her search again, resulting in wasted time and opportunity.
Don’t keep pushing decisions to another day. Gather your facts, weigh the pros and cons, seek the advice of others and make a quick decision.
You must have a passion for the work you do. Determination will only take you so far, but if you don’t have a purpose behind your actions, you’ll soon fizzle out. Not only do you need zeal as the business owner, but you must also hire people who share your intensity and believe in your cause. If everyone in your company works because they love what they do and they see the value of your brand, you’ll be unstoppable.
Ever since she was a young girl, Sally has been a helper. She wants to make life easier for people, and her vision for her online store helping working moms fulfills that need. However, as Sally’s business grows and sees more success, she also decides to give back and help working moms by offering them grants to follow their dreams. Now, Sally is working for more than just profit because when the company succeeds, she can help even more women.
Changes in technology happen at a rapid pace. Businesses that tap into new technology have time for more creative tasks. For example, if you use artificial intelligence (AI) to figure out who your typical customer is, then marketing becomes easier. Use those extra hours to come up with a campaign they otherwise wouldn’t exist.
About six months into her startup, Sally adds a chatbot to her site and invests in some AI software that tracks her customers better. The result is that her site visitors feel more comfortable ordering, so her sales increase. She is also able to better target content to her base and gets more traffic on her website.
11. Customer Service
About 54 percent of global consumers indicate they have higher expectations for customer service this year. If you want to develop a loyal base, you must step up your customer service, so it not only meets but also exceeds what clients envision.
Sally invests in customer service training and systems to make sure clients have an excellent experience no matter how they contact her brand. She trains her call center employees and spends a bit more on the live agent service for her online chat channels. The result is repeat orders from the same people, which helps her maintain her current level of revenue while she seeks new customers.
12. Old-Fashioned Luck & Modern Insurance
There are so many variables that impact a new business in the first year. Although you can control some things, there are others you can’t. In addition to determination and perseverance, you’ll need a good dose of old-fashioned luck to run a successful startup.
And just in case your business runs into a bit of bad luck make sure you have things covered with the right kind of startup insurance. You never know what could go wrong but focus on the elements you can control, and good luck will likely follow.
Sally spent time and effort finding and training the best employees and making sure her systems ran smoothly. Follow her model, and you’ll see success with your own startup.
Editor’s Note: This article is part of the blog series Start Your Business brought to you by the marketing team at UniTel Voice, the virtual phone system priced and designed for startups and small business owners.