I believe in the one year rule in business. It says that until your company turns one, you will have to work really hard to achieve anything. Finding clients and convincing them to use your services will be much harder. Getting good deals from suppliers will be more difficult. However, once your company is one year old or older, things become much easier. Prospects are much easier to believe you and give you the work and pretty much everything else falls into place too.
I think part of the reason for that is your lack of experience at the beginning. Let’s face it, no matter how many business books you have read prior to starting your own business, you still need to try things in order to learn them. And, this is exactly what the first year of business is for.
On the other hand, a prospect of a very tough first year is not something daunting and you might be wondering how you are going to survive your first year in business. Well, even though it might seem that there aren’t many things you can do, in reality you can prepare your business to flourish in the following year.
And, here is how.
How to Survive Your First Year in Business
1. Realize that things will take a long time.
The business world works slow. You will learn this pretty quickly when you launch your company. You will want to make money as soon as possible but prospects will be taking their time before making any decisions and so on.
Part of the reason for that is because you are a new company, people will be less likely to trust you right away. You will have to spend more time trying to convince them to do so. Therefore, learn to be patient. This is the best thing that can help you survive your first year of business.
2. Focus on your immediate connections and do not go after big fish.
The main reason you started your own company is money. And it is natural for us to want to make as much money as possible from the start. However, in most cases this involves working with large clients on large projects. In your first year however, try to stay away from working on big clients and focus on people around you. They will be more likely to give you work, overlook any mistakes you have made and help you find new solutions to solve them.
Such things will never happen with big fish.
3. Keep things small.
Even though it might be tempting to try and build a big company straight away, you will have many more chances for success if you keep things small. Remember that you are only learning how the business works and it is much easier to learn while staying small.
You will make plenty of mistakes during your first year of business. And, if you make them with small clients, they not only are more likely to forgive you but also their reach is limited, and the news of your mistake will not travel far. However, imagine making a mistake while working with a large corporation?
The first year in business is your time to learn and discover how business actually works. This is the time you need to invest in your business before you start reaping the results. Start small, learn as much as you can and you should see your business flourish in the future.
I think part of the reason for that is your lack of experience at the beginning. Let’s face it, no matter how many business books you have read prior to starting your own business, you still need to try things in order to learn them. And, this is exactly what the first year of business is for.
On the other hand, a prospect of a very tough first year is not something daunting and you might be wondering how you are going to survive your first year in business. Well, even though it might seem that there aren’t many things you can do, in reality you can prepare your business to flourish in the following year.
And, here is how.
How to Survive Your First Year in Business
1. Realize that things will take a long time.
The business world works slow. You will learn this pretty quickly when you launch your company. You will want to make money as soon as possible but prospects will be taking their time before making any decisions and so on.
Part of the reason for that is because you are a new company, people will be less likely to trust you right away. You will have to spend more time trying to convince them to do so. Therefore, learn to be patient. This is the best thing that can help you survive your first year of business.
2. Focus on your immediate connections and do not go after big fish.
The main reason you started your own company is money. And it is natural for us to want to make as much money as possible from the start. However, in most cases this involves working with large clients on large projects. In your first year however, try to stay away from working on big clients and focus on people around you. They will be more likely to give you work, overlook any mistakes you have made and help you find new solutions to solve them.
Such things will never happen with big fish.
3. Keep things small.
Even though it might be tempting to try and build a big company straight away, you will have many more chances for success if you keep things small. Remember that you are only learning how the business works and it is much easier to learn while staying small.
You will make plenty of mistakes during your first year of business. And, if you make them with small clients, they not only are more likely to forgive you but also their reach is limited, and the news of your mistake will not travel far. However, imagine making a mistake while working with a large corporation?
The first year in business is your time to learn and discover how business actually works. This is the time you need to invest in your business before you start reaping the results. Start small, learn as much as you can and you should see your business flourish in the future.
How to Assess the Profitability of Your Business Idea
Not every business idea, no matter how great it is, can turn profit. And, without a profit a business is simply a failure. Before you set off to launch your new venture then, assess how profitable your idea really is.
Here’s how to do it.
To find out if your business idea can make any money, you need to ask yourself, and research the answers to the following questions.
Who will buy my product / service?
Whether it’s a new tech widget that you want to produce, start a home baking business or open up a freelance writing service, you need to find out who are the people that would be buying what you want to offer.
How big is the market for my product/service? You need to establish how big or small your potential buyer base is. Take into consideration if you are going to sell locally or globally.
What sort of price are they prepared to pay for what I offer?
Once you know the size of your market, it is time to research what sort of money your potential buyers are willing to pay you. Naturally, you would like to dictate your own prices but you also need to be realistic and figure out the price expectations of your client base.
What is the manufacturing cost of my product or service?
Consider a cost of delivering each product unit to a buyer, or providing a service to each client. Compare it with the price they are willing to pay. Does your cost guarantee a good profit margin? How many units will you have to sell to expect a good profit? Compare that with the size of your market.
How many of my potential buyers are likely to try my offering out?
Try to calculate what percentage of your market will have heard of your product or service and will want to try you out. Try to calculate how many of them will be interested in dropping whatever similar product they are already using, or service provider they currently work with. You can take the current state of the market into consideration but be careful, it is easy to follow your own judgement about your competition here, instead of following the hard facts.
How easy will it be for my market to understand what I offer?
Are you bringing a complete novelty product to the market? Will you have to educate the market about your offering?
How many competitors do I have?
How many other companies are offering similar products or services to what you want to offer. Do they work in the same market as you? Are they going after the same type of client as you want to? What are their prices compared to what you want to charge?
How much will it cost me to introduce my product or service to the market?
If you intend to offer something completely new to the market, you will have to spend a lot of money to build awareness and later on, trust in your brand and product. Consider any difficulties you might have to overcome with achieving that goal, they will also affect your company’s profitability, at least until you establish it on the market.
TIP: Be 100% honest with yourself when researching answers to the questions above. You are starting a new business, and most likely your livelihood relies on it. So make sure that whatever you do, is based on hard facts, not wishful thinking.
