Getting a new business off the ground and running successfully is no easy task. Most new businesses don't survive to celebrate their fifth birthday.
A Statistics Canada study found that one quarter of businesses founded during the 1990s ceased to operate within the first two years. Only 36 per cent survived five years or more and just one fifth were around 10 years later.
But don't lose faith. There are techniques to improve the odds of success. And they almost all come down to following time-tested methods that are easy to learn.
Here are some tips for putting your new business on the road to success:
- Proceed methodically and don't take excessive risks. A recent book by French academics Michel Villette and Catherine Vuillermot argues that highly successful entrepreneurs – Ted Turner, Sam Walton and Bernard Arnault, to name a few – are anything but the big risk-takers that popular mythology often makes them out to be. According to Villette and Vuillermot, they act more like predators, moving slowly and cautiously, minimizing risk, and striking at carefully chosen moments when the odds are on their side.
- Plan effectively. Every ounce of work at the planning stage equals pounds of success at the execution stage. For a new business, it all comes together in a business plan. Successful entrepreneurs define specific goals in writing. They devote considerable effort to key tasks, such as studying their target market, defining marketing strategies and compiling cash-flow forecasts. They also build industry contacts to help them along the way.
- Define an effective value proposition. This sounds vague, but it amounts to making sure that your product or service is more appealing to customers than your competitors' offerings. Successful entrepreneurs know that no matter how good their offerings are, they won't attract customers unless they have a clear comparative advantage.
- Line up the right people. Successful entrepreneurs may be the best sales representatives in their firm, but they're rarely also the best accountants, operations managers or legal experts. What they do know is how to assemble effective teams to get the job done.
- Line up adequate financing in advance. This crucial step is a direct offshoot of proper planning. Financing is oxygen; if it runs out, the business will often die, no matter how strong its potential. Successful entrepreneurs line up their financing early, before they need the cash. And potential investors, partners and lenders will be far more likely to support the business if they are provided with detailed plans at the outset.
- Find out what help is available. Federal, provincial and municipal governments and agencies offer a range of assistance to budding entrepreneurs.
- Think long term. When entrepreneurs go into business, they are naturally focused on their first weeks and months. However, in many industries, purchasing cycles can be much longer. For example, an entrepreneur who spends his first year in business developing a new software product will then need to devote considerable time to marketing it. By thinking long term, entrepreneurs can make sure they have sufficient resources to get their business on a secure footing.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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