Approximately 70 percent of all new businesses make it to their third year, according to Small Business Trends. However, that number drops to 56 percent for those that survive until their fifth year. While the statistics continue to wane the longer companies are in business, there are several things business owners can do to increase their odds of succeeding. Here are a few of these tips for first-time entrepreneurs who want to do their best to keep their business thriving.
Select something you’re knowledgeable about
Entrepreneurs can dramatically improve their odds for success if they choose to start a business in an industry they’re knowledgeable about from prior experience. In fact, statistics indicate that the steep learning curve can significantly lower a person’s ability to sustain his business. If you’re considering starting a business, make sure you have enough knowledge of the industry and do plenty of research.
Select a large target audience
An entrepreneur must also select a product or service that appeals to a large enough target market. Whether the business owner’s wares appeal to a national audience, wide demographic group, like women 35 to 54, or a specific income segment, the market potential has to be large enough or the concept will fizzle.
Conduct competitive analysis
People who start businesses must know their strengths and weaknesses versus key competitors if they expect to survive. One way to gauge this is with a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats, according to Business News Daily. The ultimate objective would then be for the company’s strategists to feature key strengths in promotions and work on minimizing weaknesses so they aren’t as detrimental to the business.
Create a comprehensive business plan
A business plan is like a blueprint for a business. It should include everything from the company’s organization structure and product line to marketing strategies, funding sources, and financial projections. Business plans help entrepreneurs run their businesses, according to the U.S. Small Business Administration.
Have enough money on hand
Some entrepreneurs swear it’s best to have at least two years worth of salary when starting a business, but there’s really no set number. In actuality, the individual starting the business should use common sense. If the entrepreneur is starting from scratch, for example, it may be best to start the business part time while holding onto a day job, according to USA Today. This step ensures the business continues getting an infusion of cash to launch products and increase advertising expenditures.