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The Early Years of Entrepreneurship: A Step-by-Step Approach to Surviving and Thriving

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The Early Years of Entrepreneurship: A Step-by-Step Approach to Surviving and Thriving

By Caron_Beesley, Contributor
Published: April 12, 2012 Updated: August 1, 2012

Entrepreneur and founder of The Body Shop Anita Roddick once said: “Nobody talks about entrepreneurship as survival, but that's exactly what it is and what nurtures creative thinking.”

The first few years of small business ownership are undoubtedly the toughest, a huge test of entrepreneurial character.  And data proves that getting it right is as challenging as ever. According to the SBA Office of Advocacy (PDF), the survival rate for new employer firms stacks up as follows:

  • Seven out of 10 new employer firms survive at least two years
  • Half survive at least five years
  • A third last 10 years
  • A quarter stay in business for 15 years or more

So, what strategies and tactics can you employ as you venture through the early years of business ownership? Below are some year-by-year approaches to consider:

Year 1 – Be Prepared for the Unexpected

Whatever your field of business, one of the first things you’ll probably encounter in your first year is that things rarely go as planned. While you can do a lot to set up your business carefully (like these 10 Steps to Starting a Business), be prepared for the unexpected.

You may find you need to diversify your product line or that your true niche is something else. Maybe demand for your product goes through the roof and you can’t cope or you find your suppliers aren’t as reliable as you’d hoped.

Predicting shifts in market forces and business strategy isn’t easy, but you can prepare by having a plan and sufficient cash reserves to allow adjustments to your year one strategy. Many of us put off writing a business plan until we need to secure financing. However, a well-prepared plan that is revisited often will help you steer your business on its course, and help you navigate bumps in the road. Try to think of your business plan as a living, breathing project, not a one-time term paper.

SBA guest blogger and planning expert Tim Berry calls this the “plan-as-you-go” approach and he offers advice in these two blogs: 10 Quick and Easy ways to Start Planning Better and 4 Steps to Keep Your Business Planning Simple and Useful

Part of your planning strategy should focus on maintaining cash flow and having reserves. The following tips from SCORE offer good advice for building a six month cash reserve:

  • Add up all your monthly expenses, so you know what your true personal expenses are.
  • Still in a day job? Set aside five percent of your net pay each paycheck and build savings.
  • Sound like too much? Start with a goal of setting aside $100 week equals $5,200 a year, a nice cushion.
  • As an entrepreneur, you want to be sure that whenever you take a cash draw from the company, you set aside money to pay taxes. Don't be surprised by a nasty tax bill.
  • Start now. The most important thing is to create a habit of saving each week.

Year 2 – Reflect On and Advocate Your Business

At the end of year one, reflect back on your first year in business – your successes, failures and shortcomings. What would you have done differently? For tips on how to take stock of your business performance, read Taking Stock of the Business Year - How to Conduct a Year-End Review & Plan for the Year Ahead.

Year two is also the time to work ON your business, as opposed to working IN it. Becoming a fulfilled and successful business owner involves positioning yourself as a true advocate for your business, not just a salesperson. Some of the most successful brands in the world are where they are today because the entrepreneur behind the brand is out front advocating its products, its successes, and its core values – think Richard Branson or Steve Jobs.

Becoming an advocate isn't difficult, but it involves relinquishing control of some day-to-day business operations that you have gotten used to as a startup. This blog offers more tips: Five Tips for Building your Small Business Brand Using its Best Advocate - You!

Year 3 – Grow your Formula

Year three is often when small business owners really feel they’ve found a formula and a niche that works. Business fluctuations still happen, but by now you likely have a good view of your financial projections, so you can better prepare for market and seasonal fluctuations.

If your niche is working for you, keep focused and stay true to it. Stay customer-centric, look for opportunities to grow in that niche, and refine your business and marketing strategy to stay ahead of the curve.

How has your business evolved and adjusted its strategy to succeed and get through the difficult early years? Leave a comment below!

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Still there will always be lots of pull backs on the way. The main thing is just to face them and to keep going forward.
One think that I learn is that you just have to do it. Don't expect until you feel fully prepare, you'll never be. There is always something new to be learned, entrepreneurship is a trial and error processes. Yes, do your homework, suck up on information from experience people, read and listen, but do this while you're working on your business. One sure way to avoid major mistakes is to do the small ones by yourself and to learn from them.
Secure financing is really important for the survival of a start-up, I think. Though you can't wait too long for that funding, I can't imagine how difficult it would be to have to worry about starting a company without even having enough to make it through the first few months. If you project enough income to pour in at the beginning, maybe, but that's unusual for a start-up.
There are several more points, but the most important thing is to stick at it and believe in your own ideas. Never give up because a start-up is never easy.
You need to have a clear plan before you start your business. Still there will always be lots of pull backs on the way. The main thing is just to face them and to keep going forward.
I think one of the most important keys to succeeding is by learning from others. Read books on successful entrepreneurs and how they failed and failed prior to becoming successful. It is of utmost important to recognize ones failures, and more importantly, learn from the mistakes and make sure that you don't repeat them. Learning from others mistakes is essential and can help save you a ton of time and energy, and money ofcourse!
I completely agree with being prepared for the unexpected. I always advise people before starting a business to do extensive market research. Know your market, your consumers, your competition, your margins - know everything you possibly can before launching. But even then it is crucial to be mentally, emotionally and financially prepared for the unexpected. That's the exciting thing about entrepreneurship, but it's something people have to be aware of going in.
Starting your own business requires a basic business plan including a profit/loss forecast and consider how to finance the start-up. Even the choice of a name for your business is important. It has to suit your company and its products. There are several more points, but the most important thing is to stick at it and belive in your own ideas. Never give up because a start-up is never easy. Belive me, it will be worth while.
You may find you need to diversify your product line or that your true niche is something else. Maybe demand for your product goes through the roof and you can’t cope or you find your suppliers aren’t as reliable as you’d hoped.
True words. Many people have the problem that they already give up after the first months. But it's like in real life: You grow up, you get to know what's important and what not, things you should avoid and things you can do better. It all consists of the experience you get throughout keeping focused at your thing!

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