Every day new businesses open up shop for the first time. The owners of these businesses are often driven by the dream of being their own boss.
Unfortunately, entrepreneurship is much more difficult than many people realize. It is said that two out of three small businesses fail within the first three years. So, how can you raise your odds of building and maintaining a successful business? You need to have a viable business plan of course, but there are other factors to consider when starting a new business.
In a February 2012 Financial Post article, seasoned entrepreneur David Cohen was interviewed and said that mentorship is a critical requirement for startups. He believes in it so strongly that he founded TechStars, a company that mentors and invests in new technology-driven businesses. While not everyone can enroll in TechStars’ wildly successful and competitive mentorship program, any aspiring entrepreneur can take his advice to heart by engaging with other small-business owners, asking questions, and learning from their mistakes.
Another influential factor for a business’s success is the type of person running it. David Trahair, author of The Entrepreneurial Itch, reveals in his book several essential skills and personality traits necessary for any new business’s survival. Here are a few of those attributes for you to consider:
• Successful entrepreneurs are passionate about their work. They do not typically work a standard nine-to-five workday (at least not in the beginning). In order to be successful, they need to be dedicated to the business, no matter the extra hours or weekends it takes to get things done. This commitment will be easier if you enjoy what you’re doing!
• They make prudent financial decisions. As a new small-business owner, you might not see profits for several weeks or even a few months, so ensure that you have enough money to pay your business’s bills and your own living expenses. Trahair emphasizes that cash-flow issues are the number one reason new businesses fail. His book offers useful advice on how to mitigate this issue.
• They are excellent salespeople and are able to attract a variety of clients. For some businesses, advertising in a newspaper or by mail can be effective; however, Trahair found out the hard way that such advertising didn’t work for his accounting business. Instead, effective promotion of your business could be done through networking with existing contacts. It all depends on the type of business you own. For example, a new restaurant may benefit from a mass-mailed brochure because people often try different restaurants; however, these same people often retain one accountant or lawyer for several years, so a brochure isn’t likely to prompt them to switch.
• They have effective communication skills. No matter what type of business you open, you’ll be frequently interacting with a variety of people such as clients, banks, suppliers, investors, employees, etc. If you are an effective speaker and writer, it will help your business run smoothly.
• They know when to ask for help. Entrepreneurs do not need to excel at every aspect of running a business. For example, if you are unfamiliar with bookkeeping, take a course to improve your skills, or if you can afford it, hire a bookkeeper or accountant to handle your finances. Another option is to do as David Cohen of TechStars recommends: find a mentor that can help you manage your weak points. You cannot prepare ahead of time for every challenge that comes with owning a business, but you can seek out advice to avoid making common mistakes.
Not everyone is born with the entrepreneurial gene, but many people are, and many more can improve crucial skills to become successful small-business owners. Even accomplished entrepreneurs need to consider their personal strengths and weaknesses before embarking on a new venture. A combination of a prepared entrepreneur with the guidance of an experienced business owner will give a new business its best shot at success.
For more information, consult David Trahair’s book, The Entrepreneurial Itch. It is an excellent resource for aspiring entrepreneurs as it focuses on helping small-business owners become successful in the long run. The Entrepreneurial Itch is available now in our online shop.