According to the USA agency SCORE, in 2007 new businesses survived a length of 2 years or more only 67% of the time. At the same time, Small Business in Canada reports that only 55% survived a length of 2 years or more. The difference between the 2 percentages is not what this article is about; but rather, why such large failure rates?
Did you know that many people have a great idea, know their business, product or service and decide that their dream of going into business for their own selves is going to be a reality? So they gather all of the resources to go into business and off they go. Maybe at first, things are going well and sales are going gangbusters. But then "life" happens. Things are starting to go wrong and our dream starts to become a nightmare! We aren't in business for ourselves anymore, we are in business for our employees, our bankers, our vendors, everyone but ourselves. How could this happen?
This happens more often than one might think because some of these people were fortunate to recover before they became part of the "failure" statistic. Wanting to have your own business going into your own business because of the economy we live in requires careful planning.
While we could write a book regarding "how to" prepare a Business Plan, suffice it to say that it is the most important task a business owner can do before going into business AND then continuing to do this after you go into business. A Business Plan makes you think about:
- what your mission and values will be,
- who will be your key personnel
- will the market support your product/service; is it a niche product/service,
- how will your production occur or services rendered,
- do you have your location identified and is it convenient to your customers or traffic,
- is your financing in place, have you looked into grants, low-interest loans,
- have you completed all of your financial projections; remember if you require a loan, someone needs to be sure you can repay,
- don't count on just year-end figures as sales, inventory etc fluctuate and you may find yourself strapped for cash and require a "line-of-credit"; and, without forethought, is your lender willing to lend you more money,
- have you considered the fact that there may be other items you need to consider such as permits/licenses, Federal/State/Local ordinances, various insurances, etc.
Everyone learns lessons in life. I encourage you to learn from other people's mistakes because in this particular aspect, learning the mistakes others have made are unnecessary and can lead to a lot of sorrow. Don't try to do all of this by yourself. Get some expert advice. Remember, you are an expert at what you do or produce, so unless you are an attorney or an accountant, solicit their assistance if at all possible.
So my friends, will your new business succeed or fail? While nothing in life is guaranteed, having a solid Business Plan in place gives you strength in numbers. Pun intended.
Best wishes for your new business,
Carl L. Snyder, Jr. MBA
The Best Business Builder, LLC
www.thebbbllc.com © 2009