Small Business Basics You Need to Know

Now that you have your investors lined up and your plan in is motion, it’s time to start your small business. Unfortunately, a large number of startup companies don’t make it past their first two years of being open. There can be a myriad of reasons and factors as to why a small business doesn’t succeed, but at the end of the day, it comes down to how well the business is run. If you’re about to get your company off the ground, here are some of the small business basics you need to know to be a success.

You’re on Your Own

Starting a small business is a huge risk. According to the Small Business Association, 30% of small businesses fail within their first two years and 50% fail within their first five years. Of course, there are a variety of factors that help determine the success of your small business, most of which are directly influenced by your choices. One of the biggest mistakes people make when launching their startup is quitting their current job. It’s risky to leave your source of income before your new business has been on a positive trajectory for at least four or five years. It might not always be possible to pursue both ventures at once, so if you do quit your job to pursue your dream, make sure you have a backup plan or safety net in place.

Bookkeeping is Essential to Success

Many small business owners fail to keep their finances in order and properly managed. Budgeting takes a backseat, a few splurges are made, and before an owner knows it, they are so far into the red that they can’t get out. Business accounting services from Community Tax are a great way for a small business to keep their finances in order and stay out of trouble with the IRS. Allowing a third party to manage your business’s financial accounts will not only take a load of work off of your plate, but can also better ensure the safety of your startups success.

Research Your Competition

You don’t need the read The Art of War to understand the importance of knowing your competition. The latest technology, a new recipe, successful business practices, are all perfect examples of what you have to gain from your competition. Before you open your doors, take a tour of every business in your town or city offering the same services or products as your business. Find out what’s working, what’s failing, and what you can do better.

Location Really is Everything

You’ve probably heard the phrase, “Location, location, location”. There’s a reason it’s one of the first things people say when giving advice on starting a small business: it’s true. Every city has a piece of commercial property that constantly changes ownership and sign names. Most of the time these business simply cannot sustain themselves due to the poor location due to high rent, low foot traffic, inaccessible parking, and so on. When planning out your small business, make sure you’re getting the best possible location you can. For any customer-based service or product that requires significant exposure, prime location is will be incredibly important. However, you shouldn’t break the bank to lock in a commercial property. One way to avoid this predicament is to sell your goods entirely online or opt for mobile food trucks or catering if your small business is within the food and beverage industry. You’ll save yourself money on rent and avoid the risk of picking a location with high turnover rates.

Start Small and Grow Slowly

So many businesses try to start out too big because they overestimate their clientele and profit potential. What may have worked incredibly well in your dad’s garage may not translate to a large commercial space downtown. If you do operate out of a physical location, start small leasing a large commercial property you can so you can get a feel for the market and expected revenue. Don’t begin taking loans out for expansion until your business has started turning a profit and paid back most, if not all, of any outstanding debt or loan.

Keep these important small business basics in mind and you can avoid becoming just another statistic.