Creating a company that provides a needed service or product, excels in the short term, is profitable, and has potential for long-term success is challenging.
Starting a business is also a risky venture. According to the Small Business Administration, about two-thirds of businesses with employees survive at least two years and about half survive at least five years. These statistics are the same across industries, from construction to retail and restaurants to nonprofits.
Whether you are just getting started or are still in the early stages of revving up your business, here are tips to increase your chance of success and create a company that lasts.
Begin with a great idea
Without a great idea, your business dreams may fall apart quickly. All long-lasting businesses start with a useful or innovative idea – an idea that solves a problem, is easy to understand or use, and is something that people will purchase again and again and/or recommend to others. A great company then builds on its initial idea by expanding its reach.
Research, research, research
Before you dive into the finer details of creating your company, like choosing a name, it is crucial to research the competitive landscape and understand your target customer. What do they need, what do they want, what do they care about, what motivates them, where do they shop, and how will your offering improve their lives?
This is also the time to decide how you want to set up your business entity. Will you be a sole proprietor, or will you be hiring employees right from the start? All of these decisions have important tax consequences that can work in your favor when researched ahead of time and guided by the advice and counsel of knowledgeable experts..
Develop a business plan
Making a thorough business plan is essential to ensuring short-term success and long-term sustainability. A business plan documents your competitive analysis, details your organizational structure, lays out your products/services and value proposition, maps out your marketing and sales approach, and projects your business finances. We recommend developing a one-year plan at minimum to start, and then moving on to a 3- or 5-year plan that focuses on longer term strategies to grow your business.
Diversify your offerings
While businesses often start out small, having a diverse set of products or services can help set you up for long-term success. Even if you have a highly specialized company, within each specialization there are opportunities for expansion. For instance, a pet store can offer dog grooming services or pet training in addition to animal-related products. This enables a business to flourish by having multiple profitable offerings.
To have a sustainable business, you need to be adaptable. Many businesses found themselves facing unimaginable challenges during the COVID-19 pandemic and quickly had to adjust their services and products. According to Firefly, Datassential’s proprietary database, 79,438 restaurants in the United States closed in 2020, which is over 10% of all restaurants in operation at the outset of the public health crises. What were the key factors that determined success or failure? The restaurants that survived quickly pivoted to contactless takeout or delivery, making it possible for consumers to continue to patronize their businesses safely.
Listen to your customers
It’s tempting to assume your customers are happy and will keep coming back, but what happens if they don’t? Take the guesswork out of the equation by regularly asking your customers for feedback and suggestions on what you can do better. Many online purchasing platforms have the option to include automatic customer feedback surveys. This feedback is critical to identifying problems early and fixing them before they become larger hurdles.
Need help getting started? Contact Gift CPAs!
Gift CPAs are not just small business accounting experts – we are startup experts! We’ve helped countless small business owners turn their passion into a profitable business. If you are looking to start a business, we highly recommend using a CPA as an advisor.
To meet with a Gift CPAs professional and get personalized advice about making your business sustainable, or to learn about our other services, contact us to make an appointment. We look forward to meeting you virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster!