Do you have what it takes to turn a good idea into a successful business? A good idea alone is not a guarantee of business success. Statistics show that “about 96% of small businesses that enter the marketplace survive for one full year, 85% survive for 3 years and 70% survive for 5 years. Approximately 7000 businesses go bankrupt every year in Canada.” (Source)
Here are 5 key factors in starting a successful business:
1. Preparation
“Fail to plan, plan to fail.” Taking the time to sit down and think through a solid business plan is absolutely essential. It’s like a blueprint for your business. A good business plan can be adjusted and change as you go, but a changing plan is far better than no plan. (For more about business plans, see this post.)
- Do your research.
- Know what you’re going to need.
- Calculate what it’s all going to cost.
- Be prepared for the unexpected.
- Determine how you’re going to reach customers.
- Think about how you’re going to keep customers.
It would also be beneficial to think about what kind of team you’ll need and any software that would be required to help you run your business well.
2. Work
It might sound obvious, but starting a business takes a great deal of hard work. Business ownership demands far more of your time than a typical “9 to 5” job.
Business doesn’t stop when you go home for supper. When challenges arise unexpectedly, you’re on call. You’re the “go-to”. If you want your business to succeed, you don’t have the luxury of ignoring the issues and hoping it all works out after the weekend. Do you have sufficient support in place?
When you first start your small business, you are “it”. You are the boss, the employee, the bookkeeper, the marketer, the salesperson, the receptionist, the tech support, the office supply “gopher”, and on and on and on. Until you’ve managed to build a great team to help you run your business, you’re working multiple roles. It’s a lot of work.
3. Experience
Do you have any work experience in the industry of your new business? Having prior experience in the industry is a huge asset (and matters a great deal when it comes to obtaining financing). If you don’t have prior experience, get some, or invest in significant research and spend time with people who are in that industry.
It is very different to run a business than to work in a business. Industry experience alone isn’t a guarantee.
Do you have any business background? Have you run a business before? Have you taken any business courses? Do you know what to expect? Do you know about paying taxes, reporting GST/PST quarterly taxes, etc.? These are all important pieces of information. The more you know, the better prepared you are and the less likely you are to miss something that is crucial to your business success.
There are so many valuable resources out there. Take advantage of them. One of our recommendations is the Calgary Public Library, which offers a surprising amount of small business support. A business coach or mentor is an incredible asset.
4. Money
There’s no getting around it. Money is a requirement. It costs money to start and run a business. Usually, it costs more than you expect to get started. Being in a financial position to allow positive cash flow and to be able to invest in the tools and resources you need to make your good idea a reality makes all the difference. Whether it’s your own money that you invest in your business, or financing you’re able to secure, you’re going to need it. (See The Difference Between An Investor And Financing.)
When you’re looking for investors or banks to support you in your new venture, they will need to have a degree of comfort in your business. A good idea won’t be enough to convince them that your business is worth their risk. This is where your business plan and your experience can be deal-breakers.
5. Timing
Bill Gross, founder of Idealab, has done a lot of research on the key factors of startup success. Surprisingly, his study showed that timing is the single biggest reason why startups succeed. You can see a short video of him explaining his findings here.
These are just a few of the factors that contribute to business success. If you have a great business idea, pursue it! Just make sure that you’re prepared for what it’s going to take to make that idea a reality.
