Joseph is the CEO of Snap Adswhich helps local customers find small businesses willing to pay for auxiliary marketing.
The US is home to an estimated 33.2 million small businessesand that number is growing rapidly.
The “great resignation” led to an exodus to smaller towns and more country where people sought life without traffic, office politics and eight-hour days. As the pandemic eased, many did not want to return to their old jobs, contributing in part to the surge in new businesses.
In fact, a record five million companies have been created every year since 2021, which is double all previous periods.
But even as the number of companies being founded reaches record highs, only about half of them are likely to survive five years from now. The top three reasons I’ve seen for companies closing include a non-market fit, a lack of capital, and having the wrong team.
As someone who has founded more than 10 successful businesses, I have some insight into what it takes to succeed. Let’s break down these factors and see if we can find the best approach to keep your business on the successful side of that metric.
Finding a market fit
Finding a market fit is crucial when starting a business. To have customers, you must have a product or service that the world needs. Ask yourself a few questions: Would you buy this product? Why isn’t anyone else doing this already?
If you can’t say “yes” to the first question, reassess your efforts. Solving a problem you don’t have may not be the best use of your time and resources. Customers need a solution and your company needs to provide it.
To succeed, you must have an intimate relationship with the problem you are trying to solve. For example, if you don’t like ice cream, you’re probably not the right person to start an ice cream shop.
If no one else is doing what you are doing, find out why. Sometimes it’s a great opportunity when there are no competitors, but often others have tried and failed because there’s no market for it.
Try to sell your product or service as if it were already available. Who is your ideal customer? Start there. If you easily imagine a customer, then you know how quickly you can get customers. If you don’t, you might want to figure out why your ideal customer won’t buy. Understanding the market and customer needs is essential to finding a market fit.
Avoid running out of money
Managing finances is a critical part of running a successful business. Running out of money can spell the end of your business, so it’s important to plan carefully.
Before starting a new business, it is essential to create a budget and cut household expenses to free up cash. In addition, it is important to have an emergency fund to cover unexpected expenses. Your business is likely going through some serious growing pains and needs your focus, so it’s important to make sure you don’t get additional stress from things like your home’s finances.
In addition to saving money, you can also generate income by preselling products or services or finding investors or partners. This will help ensure that you have enough cash flow to keep your business running.
If you need to take out a loan, make sure you have a good plan for paying it back and consider all other options first. Many loans require collateral, such as home equity or retirement accounts. Using pension funds for starting a business can be a concern, so make sure you have tried all other avenues before doing so.
Another way to find seed funding is to work with local angel investors, high net worth individuals willing to invest in local businesses in exchange for ownership in the business. Working with angel investors can be a great way to grow your business without taking on loans. Keep in mind that this typically costs between 10% and 30% of your business.
With careful planning and preparation, it is possible to avoid running out of money and build a successful business.
Building a successful team
Building a successful team is critical for small businesses, especially during the “big layoff,” when employees are more likely to leave their jobs and look for higher pay, more benefits, and more freedom.
This trend has had a huge impact on small businesses, leading to higher turnover, but also providing an opportunity to attract big talent.
I think small businesses have the unique ability to provide meaning and purpose to employees, creating a sense of belonging and value that can lead to better morale, productivity and retention. While offering competitive wages and benefits can help retain employees, personal fulfillment through opportunities for mastery, autonomy, and purpose is what I think employees really want.
Small business leaders can provide these opportunities by promoting employees to new roles, increasing autonomy through open communication and mutual trust, and creating a clear vision and culture that every employee can get behind.
To attract and retain employees during the “major layoff”, where possible, look at:
• Offer higher wages and better fringe benefits.
• Create a positive work culture.
• Deliver flexibility.
• Provide opportunities for growth and development.
By doing these things, I believe your company is better equipped to thrive in today’s competitive job market and help employees achieve personal and professional fulfillment.
As the trend of starting a new business continues, it is critical to focus on finding a suitable market, avoiding a drain on your money and building a successful team to cross the five-year mark. to fetch.
Your dream of a successful business is there and waiting for you to continue or start, so finding all the ways to increase your chances of success and thrive in today’s competitive business landscape is essential.