Today’s small businesses exist in a landscape of economics that is new and often unpredictable, forcing out-of-the-box thinking and creativity just to get started, let alone remain stable. Here are three tactics to ensure stability for a new small business venture.
1. Prepare: All too often, entrepreneurs have boundless energy to leap into a venture before thinking through it.
While that may be the great beginnings of an idea, a business owner needs to have a long-term plan too. Take the time to prepare and think through decisions for the stability of the business.
For instance, a business owner should clarify all the reasons and goals for the business, and the best place to start, especially with a small business, is personal. The “why” behind the business, the time frame, and the goals of the business are key to making sure it lasts.
Next, take a look at the entrepreneurial personality in charge of the business. Whether that's the business owner, yourself, or another individual appointed to the position, it's important to understand how they work – know the strengths and areas to work on. A full evaluation should include how to utilize those strengths to build resources, like beneficial relationships and assets.
2. Grow attached to the market, not the idea: The key to a small business is having a unique idea or a unique way to implement it that helps consumers. Behind this idea is a passion to help and improve life for consumers in some fashion.
But to make the idea into a profitable one, you must also focus on the market. The idea was the start, but the market emphasis will be the staying power. Be aware that the idea may evolve as the needs of the market change. A stable small business has to be willing to adapt.
Work diligently to know the preferences of the customers and place the customer's preferences and experience first. How they value and view the product is a major contributor to stability, so prioritizing it is key.
3. Take a look at funding: When it comes to financing, capital to help the business function on a day to day basis can be challenging to source. New small businesses are often still tied to personal finances, and this is the place to start.
Take a look at personal debt and obligations, such as student loans, car payments, and credit card debt. Personal and student loans may be a wise option, so studying up on companies by reading reviews, like LendingKey Student Loans Review, and talking with sound loan companies can help a new business owner look at options to consolidate debt. This means less pressure on the new business to succeed all at once, and less stress is a wonderful thing.
It can also make credit more available to fund the business. Stability in a new business requires dedication to separate between personal and business obligations, as well as general operating capital for day to day expenses. Although the finances need to remain separate on the books, both the personal and business financial obligations are tied to the same person, so finding funding can be limited if the personal finances are stretched too thin.
Many business owners have also realized that there are a variety of funding options available, and in most cases, they will need to employ a combination of them.
Self-funding, fundraising, borrowing money from friends and family, and small business loans through a financial institution are the most common options. Although they believe in the idea and business, most business owners will not have enough capital to self-fund the entire thing, but the confidence displayed in investing their own money will be appealing to third parties like investors or banks.
Borrowing from friends and family is a double-sided coin, as it can risk personal relationships should the venture start to go downhill, but the people closest to the owner are also likely to believe in the vision easier than strangers because they know the business owner's goals and interests beyond the business.
Legal advice and the promise of interest paid in addition to the loan often makes this a more comfortable investment. New small businesses are often hesitant to seek out small business loans because they believe they won’t be approved. This goes back to the personal credit side of things. However, with the economy improving at rapid rates, banks are becoming more lenient in their business lending, especially if the bank is one used for personal banking as well, and a good relationship has been established there. If bank funding is not an optimal choice, numerous companies have emerged to provide funding to new small businesses without stringent credit measures.
Whichever the combination pursued, to ensure stability, a new small business must have a clear financial picture and a source or sources of operating capital.
A small business is an exciting adventure for so many reasons. When it comes time to make sure the business will last, taking an honest look at why the business was formed, what it is supposed to achieve, how it can last within the market, and the financials of it, especially funding and separating out personal finances, are major steps to ensure stability.
Very informative post! Thank you so much for sharing!
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