Have you recently started a new business or plan on starting one soon? If so, you might want to put in place some best practices to increase the chances your business survives its first few years.
Many entrepreneurs dream of taking an idea and turning it into a large profitable business but don’t consider the chances of failure. In 2013, 78,430 new small and medium-sized Canadian businesses were born. Yet in the same year, 83,240 small and medium-sized businesses closed their doors forever. Having big ambitions for your new company is great. But make no mistake, planning for business survival is just as important as planning for business success.
- The first thing you can do is make sure you’re conservative in your financial projections, specifically your income statement. Overestimating your expenses and underestimating your income is a way to be more cautious in your financial planning. It increases your margin of safety for your business and gives you more wiggle room with actual results.
- Another best practice is to focus a lot of energy on marketing and advertising to drive more sales. Many businesses fail just because they don’t get the word out about their product or services. Overestimate the number of customers you think your business needs to survive. And overestimate how many people you think you need to expose to your marketing and advertising. Larger numbers mean you need to covert less people, in terms of percentages, into actual paying customers.
- You should also learn the basics of business accounting and business law. You don’t need to become an expert accountant or lawyer but knowing the fundamentals in these two areas also increases the chances your business will survive since you’ll have more knowledge and tools at your disposal if you fall into tough times.
Overall, it’s important to plan for business survival, especially if your company is new or just starting out. If you only focus on the pot of gold at the end of the rainbow, your business might unexpectedly shut down. Put in some effort to keep the business alive first, and then focus on growth.