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How to Thrive During Your First Year as a Business Owner

By: Lending Tree

 

A team of young business people working together

Launching your own business is a big endeavor. You’ve probably put time, energy and money into this new venture — and you no doubt want to succeed. But it takes more than passion and prior work experience to get a new business off the ground. In the early stages, you may feel like you’re navigating uncharted waters. Every business is different, but there are steps you can take to improve your chances of thriving during your first year. Here are eight tips for turning your business dreams into reality.

1. Create a thorough business plan.

Think of your business plan as your roadmap. It should provide you and your team with direction and lay the groundwork for funding. A strong business plan also considers market conditions and your competition — and lays out the metrics you’ll use to measure your performance. Below are the main components of a traditional business plan, according to the U.S. Small Business Administration (SBA):

  • Executive summary: Provide basic information about your company and its mission.
  • Company description: Unpack the value your business brings to the market and who you plan to serve. Do you have any competitive advantages?
  • Market analysis: Demonstrate that you’ve done competitive research and you understand your target customers.
  • Organization and management: How is your company structured, and who’s on the leadership team?
  • Service or product line: Get into the details of what you’re selling, including its benefits.
  • Marketing and sales: This section is about how you’ll attract and keep customers, as well as your sales approach.
  • Funding request: How much funding do you expect to need over the next five years? And how will you use it? Also clarify if you’re offering equity in exchange for capital.
  • Financial projections: Explain the viability of your business and your financial expectations. If you’re already bringing in revenue, you can include these figures.

2. Set realistic expectations.

Your business plan should give you a strong sense of your short- and long-term goals. You can use that to set realistic expectations for your first year.

Saying that you want to hit $1 million in revenue could set you up for disappointment — and rock your personal finances if you’ve quit your full-time job or invested a large chunk of your savings. Start where you are and consider the viability of your business. You can set goals around sales, growth, brand awareness, funding and more. Just be sure to clarify how you’ll measure your success. That can help you adapt and make changes as needed.

3. Focus on the customer.

Growing your business might feel like your biggest priority right now, but don’t forget who you’re serving. Your existing customers and target demographic should always be front and center. That requires you to think beyond your next sale. Here are a few things to keep in mind:

  • Are customers satisfied with your products or services?
  • Do you have a strong customer service protocol?
  • Is it easy for customers to initiate returns, exchanges or refunds if necessary?
  • Does your website provide important business information and helpful content?
  • Are your prices in line with competitors?

Collecting data can help you better understand your customers and their needs. You might do that with text surveys and social media quizzes.

4. Don’t try to do it all yourself.

Even if you’re the president and CEO of your new business, you can’t be expected to do everything on your own. Part of succeeding during your first year is knowing how to ask for help.

Consider outsourcing tasks that you don’t like doing or are taking up your valuable time. That might include accounting, social media management and administrative tasks. You might hire a freelancer or third-party business to do these things for you. Do-it-yourself software can also come in handy. That might be as simple as installing a bookkeeping program. What matters most is freeing up time and energy that you can put toward other parts of your business.

5. Be mindful of your cash flow.

Running out of money is the number one reason why startups fail, according to CB Insights. The stronger your budget, the better prepared you’ll be to succeed. That will require you to keep a close eye on your expenses and the money you have coming in. The right accounting software can make this part easier. You can also look for ways to reduce your overhead and bring down your costs.

If your company is running in the red, identify what the problem is. For example, you might find that you’re purchasing too much inventory or lagging behind on sales. Identifying the problem is the first step to fixing it.

6. Consider all funding options.

There are lots of ways to fund a small business. That includes:

  • Personal savings
  • Business loans and lines of credit
  • Personal loans
  • Investors
  • Crowdfunding
  • Grants

If you’re open to investors, clarify whether you’d rather take on debt that has to be repaid or give up equity in exchange for funding. Each one has its own benefits and drawbacks. Grants are attractive because it’s free money that doesn’t have to be repaid. You can begin your search through the SBA.

7. Prioritize marketing.

Marketing is easy to overlook, but it’s a powerful way to attract new customers. You might tackle this task yourself if you enjoy it or appoint an internal point person, freelancer or marketing agency to do the heavy lifting for you. What matters most is making a plan for communicating with potential customers — and converting that into sales. Marketing can include:

  • Digital ads
  • Social media marketing
  • Content marketing
  • Direct mail campaigns
  • Partnering with other brands and cross-promoting

Your target demographic won’t be able to find you without a strategic marketing plan. When done right, it can help you create a loyal customer base that’s built to last.

8. Invest in your employees.

Even if you have a small team, it’s important to make your employees feel valued. That goes beyond offering competitive pay. It’s about creating a healthy company culture and work environment that people want to be part of. Employee turnover can also cost you valuable time and money.

Listen to their needs and ideas, and be sure to prioritize diversity, equity and inclusion. If money is tight and you aren’t able to offer a competitive salary, consider sweat equity. This allows employees to work at a reduced rate in exchange for an ownership stake in the company.

9. Seek a mentor.

There’s real value in connecting with a successful entrepreneur who’s been in your shoes. They can offer guidance, advice and first-hand experience you won’t get anywhere else. If you don’t have a mentor in mind, take a look at your network and see if there’s anyone who might be a good fit. Offering to buy them a cup of coffee is a good place to start. Lots of folks are open to talking about their journey and sharing their insights with budding entrepreneurs.

The first year can be challenging for new business owners. What matters most is having a plan, putting in the work and adapting as needed — and don’t be afraid to ask for help.

Published: February 28, 2024
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Lending Tree

LendingTree is an online loan marketplace for various financial borrowing needs including auto loans, small business loans, personal loans, credit cards, and more. We also offer comparison shopping services for autos and educational programs. Together, these services serve as an ally for consumers who are looking to comparison shop among multiple businesses and professionals who will compete for their business.

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