80% failure rate? Not you. Everything you need is within reach.
According to entrepreneurship legend, only 20 percent of people who start new businesses today will remain in business. While that statistic doesn't account for retirements, sales of a business, or other such changes, it is a bit of an attention grabber.
There are many reasons, but many are preventable mistakes. As a small business banker and consultant who has worked with hundreds of startup owners, I can tell you that many failures result from an accumulation of planning and execution errors large and small.
One of my business mentors introduced me to a simple formula for planning a business and now we are introducing it to you. Planning a business before starting it helps you to make mistakes on paper, rather than with real capital and people. One Click Advisor is a small business platform designed for that very purpose. Here is the formula, in the correct order.
Marketing first, because it brings in the customers. Whether we are talking about "traditional" or "digital" marketing doesn't matter. The fundamentals remain a focus on an accurate buyer persona. This is a semi-fictitious representation of your ideal customer. The target market is where you find these people. It can be done through a variety of research methods such as surveys, A/B or "split testing" or using census data sites such as City Data or American Fact Finder. Get it right and watch things fall into place. Your advertising and marketing spend and tactics will be efficient and you will be able to price appropriately. Design a strategy around identifying the buyer persona and choose from among these tools to contact them, or, better yet, make them want to contact you.
Operations second, as it helps you to keep your customers. Everybody loves to visit a well-run business. You certainly have a few businesses in your life that you rely on, perhaps even admire. Have you ever studied them? What makes them reliable and operationally excellent? How is it that the staff is so well-trained and helpful? These businesses started off small at one time, but built great systems. Systems provide certainty! Before you start planning your operations, plan them around serving that ideal customer; that buyer persona you identified in your marketing plan. Plan for everything, from phone systems, to point of sale systems, to inventory management if applicable, to human resources and more. Here are some great tools to incorporate into planning great systems.
Finance third, because finance is the scoreboard. Why third? Don't we need money to start and run our business? Of course. But many startup owners make the fatal mistake of chasing money before solving a problem. Think of the problem first. Who has the problem and how can you solve it? Look for money only after you have figured this out. It will make the financial "ask" much easier. After all, if you can identify exactly how the money will be used, and how it will be returned to lenders or investors, you are more likely to win funding. Here are a few tools to use in your planning. Plan your business financially, then go back to the beginning; to your marketing plan so that you can set prices.
Finally, is your plan feasible? In other words, should you do this? Business planning is a process of gaming things out ahead of time, and testing your ideas.
Only after your planning has indicated that your idea is workable should you proceed. Subject your idea to trusted, but skeptical mentors.
One you have reached a point where the business is ready to spend and earn money, you should register as a corporation or LLC. We would not recommend registering the business before that point, as there are expenses associated with incorporation. This video will provide clarity on which entity is the right one for you.
When starting a business, incorporation is only part of the beginning. One Click Advisor bundles incorporation with a variety of courses and books at no additional charge. Answers are available at every stage of the life cycle of the business, all within your reach.