Lets face it, everyone wants to start their own business. Unfortunately, for most people this dream will never become a reality. The problem is usually people either don’t have the ambition or they don’t have the money to get their project going. Over the last few years I have been studying many startup companies to see how many fail and how many succeed. The truth is that over 80% of startups fail int he first year, and of those that make it, a large portion of those fail the second year. Business is very cut throat and it’s not easy to make it now days.
So for those dreamers out there who want to take a shot anyways, here are a few tips. First, make sure you pick a niche or a business that you have a lot of knowledge about. It’s not enough to have a dream, but you also must have the skills and special expertise in that field or your chances of success are very low. The business world is very competitive and you must be an expert in order to compete. Too often I see people start business’s in fields they have no knowledge of simply because they have a dream to do it. Nowhere is this more common than the restaurant business. Constantly people are starting restaurants who have no knowledge of running a restaurants and no degree as a chef. At the end of the day, if you don’t have the knowledge then your chances of being successful are very low.
The next tip I have for starting a business is to have adequate cash flow to float the business for years if nessisary. The truth is that it is very rare for a business to be successful right away. The majority of new companies take years before they start to turn a profit. In fact, a new business venture will always cost more than you think it will. Plus, once you start operating you have to pay debt service, rent, employees, insurance, workers comp, taxes, and more. Once all those different expenses are paid off there’s very little left for the business owner. The moral of the story is to have far more capital than you think you will need just in case. If you don’t have the capital you need then it’s best to hold off on your new business venture until you can secure enough financing.
The final piece of advice I have for new business owners is to look for capital in unorthodox ways. The majority of people think that a bank is your only source of funds but that’s just not true. There’s dozens of creative ways to fund your company that you probably have not thought about yet. For example, you can use crowdfunding to source money from thousands of different small donors. If you have a business that also serves as a benefit to humanity there could be funding available. People are willing to chip in a small amount of funds if they feel the project is serving the public good. New crowdfunding websites like SmashFund are popping up that make it easy to crowd fund money.
You can also follow SmashFund on their Twitter here: https://twitter.com/smashfund