More than half of new businesses fail during the first year. According to the Small Business Association (SBA), that business survival statement is false. SBA states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years, and 66% during the first 10 years.
We reached out to over 10 experts to help strengthen your business odds of survival. Scroll down to check out our top 10 business survival tips.
Business Survival Tip #1: Create a strong business foundation
“Set up your business right from the beginning. Register your business and its name, create a business plan and hire a player team starting with a bookkeeper, accountant, and business lawyer. Go to the bank and set up your business account properly so that when payments come in you have a certain amount come out right away to go to a separate tax account. Keep one credit card so solely for business purposes and accounting. Mostly I feel so many good business owners go out of business because they do not treat the business like a business they treat it like a hobby which gets them nowhere. If you start a business right you build a strong foundation for growth in the future.”
— Belinda Ginter, Owner, www.belindaginter.com
Business Survival Tip #2: Build an emergency fund
“For me, the best thing I did was be cautious. I didn’t spend all the money as it came in. Instead, I just spent what I absolutely needed to. This way, I built up an “emergency” fund for quieter months. If I hadn’t had the emergency fund, I’d have failed before my first year was out as months 6 and 7 saw next to no income.”
— Tina Bailey, Owner, www.mothergeek.co.uk
Business Survival Tip #3: Be future-minded
“It starts with identifying a product or industry that will be relevant in 50 years, that will grow with the population, and that plays into Maslow’s hierarchy of human needs. Oftentimes business owners choose unsustainable businesses, products or services that have a short shelf life. If you want to be in business in 10 years you have to plan for it in advance.”
— Chaz Van de Motter, VP of Sales & Marketing, Elite Marketing Studios
Business Survival Tip #4: Build the right connections
“Your business is much more likely to survive if you, the business owner, have built the right connections with people who can help you find the resources you need. In other words… your network! Surround yourself and spend focused time with like-minded business owners who have survived and are willing to share advice, help you solve problems and give you encouragement.”
— Beth Bridges, Owner, The Networking Motivator
Business Survival Tip #5: Establish great business credit
“Great business credit can help pave the way for several benefits, including easier loan approvals for higher loan amounts, significantly reduced interest rates on loans and credit cards, easier access to desirable rental properties, and better business-to-business relationships all around. If you put off the opportunity to build business credit, it may become difficult to secure the funding required to help your business grow. Lower credit scores generally mean much higher interest rates, and you may even need to provide a personal guarantee. If you’ve already built your business credit scores, you’re much more likely to be seen as a reliable and potentially profitable borrower.”
— Sean Messier, Credit Industry Analyst, Credit Card Insider
Business Survival Tip #6: Know your customer
“Work out your ideal customer avatar. For instance, if it’s a B2B client – What would your ideal contact’s title be? What’s the annual turnover of the company? Geographic location, number of employees, number of offices or outlets? How much business could they give you – how much do you need? When you have that – do not deviate from the path – find people and businesses just like that. If it turns out your ideal customer doesn’t want what you’re offering – either redefine your product, service or ideal customer avatar. Also, the biggest problem with most businesses is that they try to sell to everyone – and then waste their time on the wrong opportunities – and then go under.”
— Chris Murray, Founder and Managing Director, Varda Kreuz Training
Business Survival Tip #7: Value your customers
“The more value you add to your customers, the more money they’ll pay for your products and services. Adding more value will also make customers want to naturally talk about your company and products, leading to more new customers from word of mouth marketing.”
— Tom Corson-Knowles, CEO, TCK Publishing
Business Survival Tip #8: Finance tips
- “Bootstrapping as much as possible. I believe that not taking on debt in my first business kept it going for so many years because it proved that the business was able to support itself.
- Setting up a savings account.This is solely for the business so you can set aside any taxes that will be due at the end of the accounting year. As a general rule of thumb, I save 20% of my revenue for tax planning.”
— Chloe Crisp, Founder/Chief, Visionary Keshinomi
Business Survival Tip #9: Hire an amazing team
“Hire a team as soon as you can afford it. As an entrepreneur, you are used to taking on the business by yourself. [This means] handling the marketing, communicating with vendors, helping customers, basically anything and everything! While it’s wonderful to be involved in these processes, it’s simply not scalable as it leads to long evenings and weekends. And, ultimately you risk burning out. Being able to delegate tasks to others increases productivity and lets you focus on more ways to grow your business!”
— Tahnee Elliott, Founder & CEO, T.C. Elli’s
Business Survival Tip #10: Always have a backup plan
“Have a back-up plan. There’s always a chance that your biggest supplier or client goes bankrupt. Or, your shop gets robbed, or anything else happens that may or may not be contingent on you. To avoid being caught off guard, create an emergency or back-up plan, just in case.”
— John Breese, Founder/CEO, Happysleepyhead.com