Image by mohamed Hassan from Pixabay

By James Daniels

Have you got your business up and running? Perhaps you are putting the final pieces in place before launching? Either way, the most essential period for your new company is the first year of operation.

This isn’t a baseless statement. There are plenty of stats around that back it up. For instance, research reveals around 20% of new businesses disappear after the first year. This number might not sound too drastic on its own, but it grows close to 50% by the fifth year. These failures can often be attributed to not having the right foundation in place during those all-important first twelve months.

If you’re worried about making it through this period, this guide is here to help. Below are seven essential tips for your new business to survive its first year.

1) Write a business plan

Not all new business ideas require financing from a loan or investor. Startup costs can be minimal, or a prospective owner might have the necessary money available – and they’re willing to inject this into their new company. As a result, it can be tempting to skip going through the lengthy process of putting together a business plan.

It is highly recommended you steer clear of this route.

Even if your business plan doesn’t have the end goal of receiving a substantial cash boost, this isn’t the only reason to produce one. It is a fantastic way to gain a greater overall picture of your business vision.

You understand fully what your business is aiming to solve. Research uncovers the type of expenses, potential sales, and overall profitability over the first year and beyond. You also learn one particularly vital point: if your company idea is ultimately viable.

In addition, very early on your have to decide what legal format your business is going to take. Will you need to incorporate, for example? Or will you be acting as a sole practitioner? Or as a partnership or a limited liability corporation? Whatever you decide, you may want to seek help from experts in Company Formation to make sure you’re satisfying all the legal requirements.

2) Don’t run before you can walk

Starting a new business is exciting. There’ll be many concepts and visions flying around in your mind as you plot for the future. It is easy, however, to make the mistake of throwing too many ingredients into the mixing pot – especially at the start.

Your plan could be to appeal to a mass market. Yet when you’re a newcomer to the game, attempting to attract everyone is a dangerous strategy. It’s a quick way for your business to become nothing to nobody.

Instead of attempting to become a million-dollar empire from the first day, it’s vital you set realistic milestones and target a smaller – and more loyal – customer base. With small incremental, achievable goals, there’s a much greater chance your business will grow organically.

3) Have financial lending options available

A business is always going to have ups and downs. Those downs are particularly troublesome during the first year when money is tight. With the costs associated with getting started and sales numbers still in their infancy, a rough patch can quickly put you into financial trouble – and put your business at risk.

It’s important to have a backup parachute ready to use when necessary. This can be found in the form of financial lending. There are various options available in that regard, although a popular choice is understandably a small business loan.

Of course, there are several small business loan choices – and this can create confusion. For example, Aion is a financial specialist that often has to answer the question: is a small business loan secured or unsecured debt? Due to this, you need to know which loan – or other lending option – is best for your business and specific circumstances.

4) Limit expenses           

It’s easier said than done admittedly, but you should try and limit your expenses as much as possible. This is a tip for any business in general, although it is imperative for newcomers that have little money available to flutter away.

The good news is there are numerous ways to keep costs low – and it doesn’t necessarily have to negatively impact your product or service quality. As an example, automation technology can cut down on the number of tasks that need to be completed by a human – and reduce the necessity for employees. Speaking of which, freelancers and contractors can be used to fill the gaps rather than take on more full-time staff members than is required.

5) Reinvest back into the business

When beginning a business, there are differing opinions around what to do in terms of giving yourself a paycheck. Some will say you have to keep paying yourself a salary to keep covering personal expenses – which is a given if you don’t already have any funds saved up and put to the side for such bills. However, it is generally advised to reinvest as much money as possible back into your business.

If you’re switching from the stability of a regular wage, this change can be jarring. Yet whether you’re putting money into your marketing efforts or developing new products, it is essential you keep reinvesting to build up your business during this formative stage.

6) Avoid sticking with what isn’t working

Stubbornness can quickly cause a business to crumble. Mistakes will be made – that’s the nature of running your own company. Whether it’s pricing, your marketing approach, product features, and so on, certain aspects simply won’t work in the way you expected.

Reacting to mistakes both swiftly and positively is a must. A change can be a hard decision to make but altering your approach when it’s clear something isn’t working can be the difference between success and failure.

7) Have a long-term strategy

You want to successfully come out of the other side in that first year. That’s obvious. Nevertheless, your approach shouldn’t only be fixated on getting through those initial twelve months. If you’re only thinking about the short-term, you will struggle to know what to do afterwards.

Instead, ensure you have long-term goals in place for your new business. Thinking far ahead into the future might seem a little risky, but a long-term strategy is necessary, so you know what to aim for in your second, third, fourth years and beyond.

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James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can while away hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.