- Start a Business
- Business Ideas
- Business Financing
- Marketing & More
- About Idea Cafe
5 Tips To Increase Small Businesses Survival Rate
by A. Weinrich Fri, 04/15/2011 - 18:05
Statistics vary from country to country but the fact is that the survival rate of small businesses in their first three years of operation is an alarming figure. According to the UK Department for Business Enterprise and Regulatory Reform about 71 percent of small business start-ups make it through their third year. In the USA this figure is around 65 percent while in Canada statistics show a 20 percent survival rate after the first three years.
Several causes contribute for this high failure rate, among them the lack of capital, experience and a solid business plan.
Excitement and enthusiasm usually mark the beginning of most small enterprises, followed by panic and distress at the first sight of an unexpected difficulty or trouble. A sudden fall in sales, an unpredicted rise in costs/expenses, the loss of a big customer, these quite common business occurrences may have a disturbing effect upon the new entrepreneur, all the more so if he hasn't prepared himself to cope with it.
How can your business survive this high mortality rate?
Here are five tips to make your business a success instead of a failure:
1. Write a business plan - if you didn't write it when you started your business, do it now. Your business plan should include information like a description of the service/product you provide, who are your customers, who are your competitors, what makes your business different from theirs, etc. Describe the resources you need to run your business, like computers, software, machinery. List all your business expenses, the total monthly cost of running your business. Determine your break-even point, the minimum sales you need to cover your expenses. Establish profit and sales targets and the action steps necessary to reach them.
2. Maintain strict control over your finances - this goes for your business as well as for your personal finances. Cut your expenses, getting them down to the bare essentials, then establish a budget and stick with it. Re-invest part of your profits in order to grow your business but don't forget to build a reserve fund for the times of adversity.
3. Set up and follow a disciplined work schedule - hard work is an important ingredient for success. Do every day what has to be done on that day. You will not achieve your goals by procrastinating or putting things off for tomorrow.
4. Overcome your limitations - everyone has a shortcoming. You may be an excellent technician but a bad administrator. You may know a lot about administrative procedures but very little about banking and finances. Don't get too upset about it. Recognize your limitations and make a decision to do something about them. The skill or knowledge you lack can be acquired through study, practice or expert advice.
5. Keep a positive attitude - visit online and offline communities of business owners to share experiences and seek advice. Success stories of other small business owners turn out to be an inspiration, a living proof that motivated, hard working people can achieve what they set out. Surround yourself with people that support and encourage you, not with negative people who only see the flaws in other people's ideas.