Building your own company from the ground up can be a real challenge, but that challenge can yield massive rewards. However, those rewards are reserved for those who come prepared. Small businesses are uniquely positioned to face more severe penalties for even minor mistakes, so the majority of small businesses don’t even last a full year.
Here’s what you need to know in order to keep your company off the chopping block.
Opening your business will be expensive, so much so that small business owners almost universally depend on funding from external sources. Most commonly, this takes the form of a business loan, but small companies can also be funded by private investors. When you apply for a bank loan, you’ll be dealing with a bank. This means that your credit score will have a direct, profound impact on your odds of success.
After all, your credit score represents your ability to make good on your financial obligations. In order to improve your credit score in order to secure your loan, you can use a secured credit card in order to create opportunities for your score to improve.
This works because your credit score will increase as you reliably pay your bills on time, and credit card bills can be manufactured with paying them off in mind. By only using your card when you know you can pay that amount, you’ll always be able to pay your bill on time.
Investors are a different story. While your credit score can’t hurt, private investors are typically business owners in their own right. This means that your business plan will be of much more importance when dealing with an investor. In either case, financial benefactors want to see a return on their investment, but investors will be willing to overlook a less than ideal credit score for a profitable business model.
This is especially true because of the opportunity for investors to own a percentage of your company and continue to profit over time. In exchange for this partial ownership, you may receive additional assistance here or there, but you may also be beholden to the whims of your investors. When choosing between investors or business loans, weigh your options carefully.
Create an Informed Business Plan
While it’s an important part of getting funded by a bank or investor, your business plan will also determine your ability to succeed once you open your doors. However, a competent and comprehensive plan isn’t cut from whole cloth, and your elevator pitch will only get you so far. In order to create a business model that is geared for success, you’ll need some information that can guide your actions.
This starts with market research that will give you an essential overview of who your audience is and what they want from a business within your market. You’ll need the help of a PR firm to handle the surveys that go into this kind of research. While it may seem underwhelming, surveys are the backbone of market research and continue to provide a level of insight that’s hard to match.
Develop a Marketing Campaign
Once you’ve secured the necessary funding for your company and a successful business model, you’re going to need to get your name out there if you want to turn a profit. Market research once again comes into play, because it can help you create a compelling brand that speaks to your unique audience, but the brand alone can only do so much.
You’ll need to manifest that brand into advertising and other promotional materials that serve as the call to action that will attract consumers to your business. Marketing is the vehicle by which you can drive sales in order to create revenue.
The success of your business will depend on several factors, of which these are just a few. However, these tips will serve to help you create the foundation upon which your business can grow in order to achieve lasting success.