Saturday, April 26, 2008

Make or Break.

That crucial first

WHAT happens in a year that makes it the make-or-break-period for a small business? People spend most of their start-up money. They don’t have as many orders as they need to pay their bills. And people don’t anticipate the expenses that come up. Also, most entrepreneurs need to build up their markets and loyalty, slowly. Maybe 1% of the people have an unbelievable product, but most have to build up their customer base and they end up running out of money before they get there.

The three key things that have to happen within the first year to ensure that a business doesn’t fail.

Get to know your product, get to know your market, and get good employees. You have to have good people to back you up, and you have to know your target market or you are wasting your time. If you have the wrong market, you have to keep testing to find out what that market is.

What is crucial for an entrepreneur to know when starting his or her business that might help it survive?

They should know what their goals are and what they want out of the business. Do they want to simply make a living? Do they want to end up being a big company like Google? Do they want to stay local or sell nationally? They have to have some goals to know what they are going to be and what they are going for.

What is that something, which often happens during that first year, that can overrun a business if it is not dealt with?

One of the easiest things is to get behind on direct taxes. And once you get behind, it starts to mushroom. The officials won’t come after you right away, but they will get you in due course. Another thing: You almost have to go into business thinking that you are not going to make a fortune initially. In the first year, you need to make a foundation first. And, in the beginning, you have more bills than you know what to do with.

Will an owner’s attitude affect the entire business. How so?

Sometimes owners go into a business thinking, “I’m king. I can do what I want.” It turns out to be the opposite. The people working for you pick up on that attitude, and if you are vague or indifferent with customers they will be, too, and your customers will not come back. It can ruin a whole business.

Some think losing a big account is the end . Is it really so?

First, you should never take an account that would ruin your company, if you were to lose it. You can lose an account for any number of reasons. A larger account has a lot of expenses. You need to think about what you would do, if you lose that account, so that your business will not go down. You can’t let it shut you down. You should have backup sources and not give that big account everything. That way they can’t take everything if you lose that account.

How should one deal with competition?

Know what your competition is doing. You can’t run a business and ignore it. If you are a retailer, shop your competitor’s store or send in mystery shoppers to see how they treat customers. Check their website to see what they are doing. They might be announcing something new, and you don’t want to be caught off guard. Hopefully, you have something that you are working on and it is better. That way you don’t have to get into a price war, because that’s when everyone loses. You need to be aware of your competitors or they will eventually pass you by.

(Adapted from AOL’s small business website)

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