March 15, 2022
When you go through the effort of starting your own company, you want it to be around for a long time to come. However, about 20% of small businesses fail by the end of their first year alone, according to the U.S. Bureau of Labor Statistics.
Just because the rate of failure is so high for many businesses does not mean that your company is doomed. Small business owners that have sustainable, long-term growth plans are far more likely to build a business that lasts. Before starting your business or while coming up with your growth plan, here are some factors affecting longevity that you should consider.
Have you ever heard the old saying, “don’t put all of your eggs in one basket”? That applies to small businesses as well. Many business owners get too relaxed after finding a niche that they think works for them, not thinking about how new technology and changing markets can make companies obsolete in no time. Just look at what happened to companies that seemed too big to fail, such as Blockbuster.
The good news is that small businesses are, by nature, far more agile than huge corporations. Smaller companies can easily pivot to a more lucrative field or niche. While your business grows, stay on the lookout for potential revenue streams or alternative niches, and avoid getting too complacent.
Successful, sustainable companies are flexible yet consistent at the same time – a delicate balancing act that can seem counterintuitive. However, it doesn’t have to be. To build a successful company, you should focus on one niche and establish your reputation in that niche. At the same time, you can stay on the lookout for opportunities to pivot in case your industry changes.
For example, it is very difficult to build a successful company that sells both freelance web design services and soap (although not impossible if you are creative enough with your branding). Customers will be confused about what you offer and may even think that you’re not good at either of your services if you are too spread out.
However, a soap business that has consistent branding of its high-quality soaps while looking into producing shampoo or bath bombs (in case markets change) has the right balance of flexibility and consistency.
Successful business owners must be confident without being stubborn. The success of a company does not depend just on one person, but on the happiness and well-being of employees and customers. A CEO or entrepreneur must have their finger on the pulse of what customers want and if their services are meeting that need. Whether by tracking customer surveys, marketing and sales KPIs, or another metric, successful businesses always have the happiness of customers in mind.
Customers are not the only people that need to be satisfied for a business to succeed. Successful entrepreneurs also keep the happiness and well-being of their employees in mind. Satisfied, engaged employees help a business run smoothly and can even make suggestions to help a business run better. Companies with high employee turnover that ignore employee feedback fail because they ignore vital intelligence from the people that make that enterprise run in the first place.
A long-term plan for success also includes a good long-term budget. Your financial plan should include information about your current income and expenses. It should also predict future revenue streams, possible expenses, and opportunities for financing. You can also explore potential partnerships or mergers that could grow your business (if you have reached that point).
A good budget should also include financial plans for an emergency. What will your business do if you get sick and are unable to work, if supply chain disruptions interrupt your ability to deliver products, or if something unexpected, such as a global pandemic, happens? Businesses that have a backup plan in place to fall back on in case of an emergency are more resilient than those that do not.
The Keys to Longevity
Many factors go into determining the success of a business, including dedication. However, you can increase your business’s chances of success by strategically defining your niche, developing a smart budget with the help of a trusted accountant, and ensuring that all stockholders are satisfied.
If you need help with your bookkeeping and accounting, don’t hesitate to schedule a consultation with us!
Even though we are based in Albany, NY, we offer our expertise in business accounting, bookkeeping, and tax preparation all across the United States.