Everyone who starts a new business or takes advantage of a franchise opportunity hopes that once the decision is made, the business will succeed. This optimism is a good thing, but it’s important not to approach business ownership in a naïve manner.
The sad fact is, not every new business succeeds, and, in fact, many don’t. In some sectors, such as restaurants, most actually fail. Success is not guaranteed, but there are some things you as a new business owner can do to dramatically increase your chances of success:
Don’t start without enough startup capital
Ask any banker who makes loans for a new business why new businesses most often fail, and you will hear that it’s because people underestimate how much money they will need to get their business up and running, and then to maintain it long enough to begin making a reasonable profit.
While many businesspeople are very good at estimating initial startup costs and get their inventory purchase and building rental dead right, many are not so adept at estimating sales numbers, especially over the first year or so. Some far too optimistic, believing that customers will come and return again and again, but consumers are a fickle bunch. Getting them to switch takes perseverance, and more importantly, time. That’s where many new businesses get into trouble—they run out of operating cash before they have enough of a customer base.
Don’t fall prey to the dip
Most people feel a thrill when they start something new, whether it’s a new job, relationship, or business. There’s this feeling of euphoria, especially after a lot of anticipation. Unfortunately, like most things in life, that feeling usually goes away after a while, leaving people feeling empty. This “dip” can lead to depression or feelings of frustration or failure. According to businessman/author Seth Godin, it’s one of the biggest reasons why people give up on pursuits like their businesses. They want to get back that rush and realize the new business is never going to offer it again.
Plan meticulously
As businesses are multi-faceted, it is nearly impossible for them to succeed without a massive amount of planning, and this includes franchises. Owners or managers have to predict what will happen and then cause things to occur that will take the best advantage of them when they do, and mitigate losses when they don’t. This is a hard job, but it can be made easier with plans that are built on both good concepts and reality. Learning to be a good planner takes time and effort, and those that work hard at it often are those who eventually succeed.
The three basic tips above are very general of course, but they encompass a great deal of business experience. Anybody who has ever built a business knows that what they’ve achieved cannot be summed up in few paragraphs, but they also know that succeeding needs more than just hard work and good luck—it requires a lot of common sense, reality checking, and planning.
Darren Jamieson is the Technical Director of Engage Web and writes forMinuteman Press on franchising in the U.S. and throughout Canada, Australia and his native United Kingdom. He has extensive knowledge of the franchise industry, and of running a business, having helped many franchise clients through Engage Web.