Fifty percent of all new businesses fail within the first 5 years. 50%! That means that if you start a business, and a friend or family member starts a business, on average one of you is destined to fail. Why? Why do so many fail while others succeed?
My goal is that by sharing these rules with you your new business will be positioned not only to be in the 50% of businesses that survive past that initial 5-year mark but will thrive throughout the life of the business.
RULE 1: Create a Product People Want
Seems obvious, right? But 50% of all business fail in the first 5 years because shocking 43% have no market for their product. 43%! This means that over 20% of businesses fail in the first five years (50% overall five-year failure rate x 43% = 21.5%) because they simply created a product no one wanted. So make sure to create a product people actually want.
RULE 2: Make it Legal
Once you have a product people want, protect it, and yourself, legally. Secure any patents, copyrights, or trademarks (aka intellectual property) that are unique about your offering to make sure what is yours stays yours. Most importantly, protect yourself by Forming an LLC to run the business which will protect your personal assets from the business’s liabilities. Lastly, get insurance for the business and your products or services. This adds an extra layer of protection should things ever hit the fan.
RULE 3: Build it to Scale
Write every system down, every formula, every manner for running your business. Create manuals as if you will franchise your business one day (even if you are not). Once pen has been put to paper, others can be trained to perform the requisite roles in the business so it can be easily scaled.
RULE 4: Shamelessly Market Your Product
They can’t buy it if they don’t know about it. Even if you make the greatest widget in the history of widgets, no one will buy one if they do not know it exists. So if you make it make sure everyone knows about it!
RULE 5: Build a Great Team
You can’t pull the cart by yourself. Invest in creating and sustaining amazing teams. Take care of your people and they will take care of your customers.
RULE 6: Ignore the Naysayers and Work Your Backside Off
Along your journey as an entrepreneur, you will encounter people who will criticize you and your vision. Learn how to distinguish between those who know what they are talking about and those who do not. Only heed the advice of people who know what they are speaking about and have your best interests in mind. And, more than anything else, roll up those sleeves and work your backside off!
RULE 7: Cash is King
The life blood of a business is money. Without positive cash flow your business will cease to exist. A business’s purpose is to profit. Thus, your revenues must exceed your costs. Period. When they do, put away a percentage of your profits for strategic reserves. If your revenues do not exceed your expenses and you do not have a realistic plan to get them there you must shut the business down.
RULE 8: Innovate and Refresh
Even if you come to market with a completely innovative or fresh product, create an innovation schedule to push out new products, innovations, or fresh updates several times per year. You are either growing or you are dying.
RULE 9: Captain Your Ship
Determine your leadership style and captain your business. Plan for the best but prepare for the eventual storms that may arise.
RULE 10: Plan to Succeed
Success does not occur by accident. Success is a residual of design. Create and regularly update an Annual Business Map (ABM) charting out the steps you need to achieve your business goals. Maintain a daily checklist of tasks you must accomplish to keep focused on and accomplish the higher-level goals in your ABM.
ABOUT THE AUTHOR
By his 45th birthday MATTHEW SWYERS (pronounced sw-i-ers) had founded two multi-million dollar companies. Those companies, in turn, have helped to launch over 100,000 small businesses.
Confident that he knew something about successfully launching a business, he wrote a series of articles for Inc Magazine covering a wide range of topics from how to brand your new startup, to marketing, to everything else a small business needs to do to launch and thrive. Along the way a few of the articles were picked up by the The Wall Street Journal, MSNBC, CNBC, and TIME magazine. Matt has devoted his life to learning and understanding what makes a successful startup so he can provide those strategies to you.