Recent small business statistics released by the SBA in 2007 are pretty discouraging. It is estimated that only 44 percent of new small businesses succeed past their first five years of operation. Maybe the numbers would be more favorable if entrepreneurs had more information about starting a small business prior to taking the plunge.
When you are in the process of starting a small business, one of the first concerns is how you are going to fund the initial expenses. You need to make a down payment on office or store space (except in the case when you will be working from home), buy your products, hire people, order equipment and pay for the various other items and services required to get things moving. Even the application to receive a business license usually costs money.
Many people choose to either use their own personal funds or use a credit card. Others look to small business loans to help start up their new business (see Resources for a link regarding SBA loans).
Marketing and Advertising
An airtight marketing and advertising plan is crucial to any new business start up; if you fail here the business idea, no matter how remarkable it may be, is likely to crash and burn. The best advice for any new business owner is to identify the target customer, spend a little bit of money on various advertising vehicles at first, see what works, and then expand from there.
Risks and Challenges
The idea of starting a small business seems so romantic at first. You have visions of being your own boss, calling the shots, and making lots of money from your great business idea. But the reality is often much different. Most new business owners don’t break a profit until after the second or third year in business, if at all. In the meantime, they struggle to make ends meet and attract new customers.
When you’ve sunk thousands of dollars into a business and it doesn’t pan out as you first imagined, the consequences can be devastating on both your financial and personal situation. Relationships dissolve, net worth declines, and credit ratings suffer. This is why it’s so important that you go into a new small business with a clear, level head. You must be prepared for all scenarios.
When a new small business owner patiently takes the time to plan and prepare, great things can happen. For one, starting a small business is an extremely satisfying learning experience. You meet new people, travel to new places, and watch as your creation blossoms into a solid and longstanding business. Also, small business owners enjoy personal freedom; they decide their own schedule and how their business will be handled.
What Makes a Small Business Successful?
For some small business owners, making $20,000 a year is a success, while others won’t settle for less than six figures. Still others consider a business to be a success when it changes people’s lives for the better and manages to break even. Regardless of the outcome of your hard work, you are the sole judge as to whether your small business is a success.