Joseph is the CEO of SnapAdswhich helps local customers find small businesses willing to pay for help marketing.
The US is home to an estimated 33.2 million small businesses, and that number is growing rapidly.
The “great resignation” sparked an exodus to smaller towns and more rural areas where people sought life without traffic, office politics and eight-hour days. As the pandemic slowed down, many didn’t want to return to their old jobs, partially contributing to a surge in new businesses being created.
In fact, a record five million businesses have been created each year since 2021, which is double any previous period.
However, even as the number of businesses being created is hitting record highs, only about half of them are likely to survive after five years. The top three reasons I’ve seen for closing businesses include a non-market fit, a shortage of capital and having the wrong team.
As someone who has created over 10 successful businesses, I have some insight into what it takes to succeed. Let’s break these factors down and see if we can find the best approach to keeping your business on the successful side of that statistic.
Finding A Market Fit
Finding a market fit is crucial when starting a business. In order to have customers, you must have a product or service that the world needs. Ask yourself a couple of questions: Would you buy this product? Why isn’t anyone else doing this already?
If you can’t say “yes” to the first question, then you should reassess your efforts. Solving a problem you don’t have may not be the best use of your time and resources. Customers have a need for a solution, and your company should provide it.
To succeed, you need to have an intimate relationship with the problem you are trying to solve. If you don’t like ice cream, for example, then you’re probably not the best person to start an ice cream store.
If no one else is doing what you’re doing, then find out why. Sometimes it’s a great opportunity if there are no competitors, but many times others have tried and failed because there isn’t a market for it.
Try selling your product or service as if it was already available. Who is your ideal customer? Start there. If you easily imagine a taker, then you know how fast you can get customers. If you don’t, then you may want to figure out why your ideal customer doesn’t want to buy. Understanding the market and customer needs is essential to finding a market fit.
Avoiding Running Out Of Money
Managing finances is a crucial part of running a successful business. Running out of money can mean the end of your venture, which is why it’s important to plan carefully.
Before starting a new business, it’s essential to create a budget and lower household expenses to free up funds. Plus, it’s important to have an emergency fund to cover unexpected expenses. Your business is probably going to go through serious growing pains and needs your focus, so making sure you don’t have added stress from things like home finances is important.
Along with saving money, you can also generate revenue by pre-selling products or services or finding investors or partners. This will help ensure you have enough cash flow to keep your business running.
If you need to take out a loan, make sure you have a solid plan for paying it back and consider all other options first. Many loans require collateral, such as home equity or retirement accounts. It can be a worry to use retirement funds for starting a business, so make sure you have tried all other avenues before doing so.
Another way to find start-up funds is to work with local angel investors, high-net-worth individuals who look to invest in local businesses in exchange for ownership in the business. Working with angel investors can be a great way to grow your business without taking out loans. Just keep in mind that this will typically cost between 10% to 30% of your company.
With careful planning and preparation, it is possible to avoid running out of money and build a successful business.
Building A Successful Team
Building a successful team is crucial for small businesses, especially during the “great resignation,” where employees are quitting their jobs at an increased rate and seeking higher pay, greater benefits and more freedom.
This trend has had a huge impact on small businesses, leading to higher turnover rates but also providing an opportunity to acquire great talent.
I think small businesses have the unique ability to offer meaning and purpose to employees, creating a sense of belonging and value that can lead to better morale, productivity and retention. While offering competitive wages and benefits can help retain employees, personal fulfillment through opportunities for mastery, autonomy and purpose are what I find workers really want.
Small-business leaders can offer these opportunities by promoting employees to take on new roles, increasing autonomy through open communication and mutual trust and creating a clear vision and culture that every employee can support.
To attract and retain employees during the “great resignation,” where possible, look to:
• Offer higher pay and better benefits.
• Create a positive work culture.
• Deliver flexibility.
• Provide opportunities for growth and development.
By doing these things, I believe your business is better equipped to thrive in today’s competitive job market and help employees achieve personal and professional fulfillment.
As the trend of starting a new business continues, it’s crucial to focus on finding a market fit, avoiding a drain on your funds and building a successful team in order to make it past that five-year mark.
Your dream of a successful business is out there and waiting for you to continue or start, so finding all the ways to increase your chances of success and thrive in today’s competitive business landscape is essential.
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