Are you thinking of leaving your work and launching your own business but not sure if it is a good decision? Or maybe you want to start your own business but are afraid to fail? To become broke? To live uncomfortably? To disappoint your loved ones? Or maybe terrified that you might not be able to live up to your own expectations.
Starting a business can be a thrilling and rewarding journey that offers limitless possibilities for growth and success. As an entrepreneur, you have the freedom to turn your vision into reality and create a business that aligns with your values and goals. But starting a business can also be challenging and requires careful planning, hard work, and a strong entrepreneurial spirit.
And according to the statistics provided by the Bureau of Labor Statistics, 20% of small enterprises fail in their first year of operation, 30% fail in the following year, and 50% fail after five years. And finally, after ten years in business, 70% of small business owners fail.
As an entrepreneur, I've made some terrible mistakes too. However, I've also had a couple of instances where I was fortunate enough to succeed. Along the road, I've been able to comprehend some of the less well-known causes of some organizations' failures and as well as, more crucially, why few organizations manage to thrive.
There are several traits that successful startup businesses possess, and my goal is not to provide you with a comprehensive list of success factors, but rather to highlight some of the important ones. So, in this article, I am going to discuss the factors that you have to consider before starting your entrepreneurial journey.
Assess Your Finances
As we all know, one of the most important aspects of running a business is assessing your finances. This includes understanding how much money you have available, do you have the means to fund your startup for at least 6 to 12 months, or whether you will look for an investor? If you’re considering quitting your job and focusing on your new venture, do you have enough cash flow until your break even? as well as what expenses are necessary for your business to thrive?
One example of a startup business that closed due to insufficient funds is a local coffee shop that opened in a busy downtown area. However, the owner did not fully consider the costs associated with opening and running the business. They ran out of money quickly and were unable to cover expenses such as rent, inventory, and staffing. Despite a steady flow of customers, the business was forced to close within six months of opening due to financial difficulties. The lack of financial planning and insufficient funds ultimately led to the failure of the business.
Funding can significantly impact the success or failure of the venture. As a matter of fact, according to 2022 studies conducted by CNBC 47% of startup businesses fail due to lack of funding.
So, without assessing your finances, you may underestimate these costs and run out of money before the business becomes profitable. This can lead to closure, bankruptcy, or significant financial losses. Assessing finances allows you to make informed decisions about your business and ensure that you have enough funds to sustain it in the long run.
Identify And Work With Your Passion
What can you talk about for hours without getting bored? What makes you forget to eat and pee? In other words, what do you get so lost in that you lose track of time? What is your passion? If you want to be successful as a solopreneur, it's important that you work with your passion as it is the fuel that everyone needs to keep going. Research shows that passion is a key predictor of someone's persistence, creativity and performance. In other words, the more passionate you are, the more likely you will succeed. That’s why your business should reflect what is truly important to you and what brings joy to your life. If you can find a way to combine your love of entrepreneurship with something that brings satisfaction and happiness, then you're on the right track!
There is no better way to work than with your passion. If you love what you do, it shines through in your words, actions, and overall demeanor. This kind of energy can be contagious and influence those around us, including our clients. In fact, research has shown that positive emotions can have a significant impact on decision-making and behavior. When clients feel a positive energy and vibe from us, they are more likely to trust and connect with us, leading to stronger relationships and better outcomes. So, it's important to bring your passion and positive energy to every interaction with your clients. Not only will it make you feel more fulfilled, but it can also have a significant impact on your success.
Write A Business Plan
Once you have your idea in place, it's important to have a clear plan. A business plan can help you track your progress and make smart decisions about how to grow your company. There are many different types of business plans, so be sure to find one that fits your unique situation. Some key things to consider when writing a business plan include Who your target market is? What type of product or service do you offer? How will you reach your target market? How much money do you think you'll need to start and operate your business? How long will it take you to achieve profitability? Many mistakes are made by new businesses that rush into things without thinking about these aspects of the business.
Let’s use Airbnb as an example. Airbnb's business plan is focused on creating a global community of hosts and guests who can share unique travel experiences. Their plans outline the company's mission, goals, target market, marketing strategies, and financial projections. Not just that, but also a detailed analysis of the market opportunity, competitor landscape, and growth potential. It outlines how the company plans to differentiate itself from other travel companies, and how it will build trust among its users.
A well-written business plan can help a business achieve clarity by providing a clear outline of the company's objectives, goals, strategies, and tactics. The process of developing a business plan requires the company to evaluate its current situation and identify areas for improvement.
It also provides clarity which is essential for boosting employee participation and motivation because it provides employees with a clear understanding of the company's direction, goals, and expectations. When employees have a clear understanding of what the company is trying to achieve, they can align their efforts and contribute better to the organization.
Clarity also helps to create a sense of purpose and meaning for employees, which can increase their motivation and engagement. Hence, a business plan is a roadmap that helps guide the business towards success.
Purchase An Insurance Policy
One important step in starting a business is to purchase insurance. This will help protect you and your business from potential accidents, financial losses, and other risks. There are several different types of insurance available, so it's important to find the right policy for your needs.
Some common types of insurance include property insurance, health insurance, liability insurance, and workers' compensation. Each type of insurance has its benefits and drawbacks. It's important to choose the right type of coverage for your business based on the risks that you're exposed to.
Let’s take Hershey's Chocolate Factory as an example. In 2017, a fire broke out in one of Hershey's manufacturing plants in Pennsylvania, causing significant damage to the building and machinery. The company was able to use its fire insurance policy to cover the cost of the damages and the losses incurred due to the interruption in production.
The insurance policy helped Hershey's to pay for the repair and restoration of the damaged building and equipment, as well as the costs of cleaning up the site and resuming operations. Without the insurance coverage, Hershey's would have had to bear the financial losses on its own, which could have had a significant impact on the company's financial performance and reputation.
The insurance policy helped Hershey's to recover quickly from the incident and continue its operations without significant disruption.
Commitment, Willingness To Learn And Adapt To New Challenges
Being knowledgeable and skillful is important for running a business, but it is not enough on its own, they are only one piece of the puzzle. Running a successful business requires more than just knowledge and skills. It also requires a combination of personal qualities, such as time commitment, willingness to learn and adapt to challenges. A successful solopreneur must be willing to continuously learn and evolve alongside their business. This means staying up to date with industry trends, technologies, and best practices, as well as seeking out and learning from feedback and constructive criticism.
Amazon is an example of a company that showed adaptability during the pandemic. Despite facing challenges such as supply chain disruptions, labor shortages, and increased demand for online shopping, Amazon was able to quickly adapt and continue to provide essential goods and services to customers.
The company implemented safety measures such as temperature checks, face masks, and increased sanitization in its warehouses and delivery services to keep its employees and customers safe.
Additionally, Amazon hired tens of thousands of new employees to meet the increased demand for online shopping. The company also expanded its services by launching new products such as Amazon Pharmacy and Amazon Fresh grocery delivery.
Furthermore, Amazon's cloud computing service, Amazon Web Services, played a vital role in enabling remote work and online learning during the pandemic. Amazon's adaptability allowed it to continue to grow and meet the needs of customers during a challenging time.
Running a business can be a challenging and rewarding experience, but it requires a significant level of commitment and dedication. In this highly competitive and ever-evolving business landscape, being committed and dedicated is not just important - it's essential. It means being willing to learn and adapt to new challenges, staying ahead of the curve, and leading by example.
Conclusion
There is no such thing as “overnight success”; the truth is that most big businesses take ages to build. For small business owners and solopreneurs who want to succeed must focus on producing a solid foundation for their business. This means having a clear vision, mission, and values; building a good team, and developing the organization's processes, S.O.P, guidelines, checklists and culture book that will help you to scale. While it may not be glamorous, taking the time to lay a sturdy foundation will pay off in the long run as you develop your business.