So you’ve decided to start your own business.
The plan is in place, you’ve raised some funds and perhaps you’ve even quit your day job. With 85 per cent of Canadian new businesses surviving their first year, the odds of success appear higher than many would think.
Your first year will be critical – only half of new businesses make it to five years, and the decisions you make and the habits you develop early in your business will serve as the foundation for your future.
Small businesses demand more than just smart planning and good cash flow. You need to ensure that your business can adapt to any changes – good or bad. Even the most seemingly brilliant endeavours fold if you cannot flex the right amount, at the right moment.
To set your small business up for long-term success, here are four common pitfalls to avoid in the first year of running a small business:
- Doing everything yourself
It’s been said many times that a small business owner should focus on “what they do best, and outsource the rest.” Managing tasks and problems on your own helps keep your expenses in check, but can be counterproductive to maximizing your returns, particularly for administrative and technical tasks.
Multitasking can account for a 40 per cent drop in productivity, so it makes good business sense to not engage in extra tasks. Technology, accounting, marketing, logistics coordination and even customer service are all areas that can be easily managed by either a local provider or virtually, as required.
- Being blind to the numbers
Monitoring a few key business metrics allows for better decision making and can positively inform how you direct time, energy and resources into your business.
Observing monthly and quarterly revenue growth is a given, but how about operating margin (profit divided by revenue), conversion rates for new customers, referral rates from existing customers, or rate of repeat business? Tracking metrics provides insight into where your business is at and informs how you should carry out client development, spend money or fight inefficiency. Research what applies to your industry and find time to learn from your numbers.
- Not planning ahead for growth
Too often, small businesses don’t plan for the future when it comes to their digital infrastructure. As a result, they often have problems scaling up as their business develops. It is important to ensure that your communication, collaboration and productivity tools can grow and evolve as quickly as your business does.
New business owners should invest in a responsive provider for everything digital (i.e., phone systems, high-speed Internet and other communications tools) from day one, rather than fumble with upgrading services later on. You don’t need a high-capacity, enterprise-level solution today, but you do need one that could potentially become this tomorrow. TELUS, for example, can help put together a plan to manage the scaling of your digital infrastructure on a user-by-user basis, from mobile data plans and collaboration tools to their flexible Business Connect solution to manage business communications.
“Most business owners have no idea what their business will look like in one to five years,” explains Craig Thornton, vice-president of national business solutions at TELUS. “Today, with cloud-based solutions like Business Connect, you can very easily add, remove and change users at any time; and the difficult task of predicting demand for technology requirements shifts to the cloud provider, not small business owners.”
- Needing to be perfect
Perfection is something to strive for, but needing to make internal processes or service delivery perfect can paralyze your business. Neglecting perfection doesn’t mean cutting corners, but it does mean prioritizing action over excessive planning.
In the first year of business, you might not have completely figured out your product, service, market or mandate. However, spending too much time trying to refine prior to launch will quash opportunities to pivot and develop.
It’s better early on to build fast with an open-ended approach than to work to precisely define a plan, especially as you’re still feeling out how you can compete.
The first-year is a tumultuous time for the entrepreneur, but is often very rewarding. Despite how busy it might be at the moment, consider how the decisions you make today affect the success of your business down the line. Choose scalable solutions in operating your business to ensure it can win big when things go well and bounce back when they don’t.