In the U.S., an average of 60% of businesses fail in their first year. It’s alarming. This problem is discouraging a lot of ‘would be’ entrepreneurs from taking a shot at getting rich with their own business. What is the problem?
Many businesses fail in their first year because:
- they don’t have enough money to pay the rent, staff and bank loan
- they are not making enough money to pay off expenses, never mind about making a profit.
- they don’t have enough money to market their business
- they can’t afford to hire more staff to do the tasks. Everyone is over worked.
These are common sense – they all have to do with money.
So if money is the main reason, here are ways a home business entrepreneur can start successfully start his or her business — and see it survive beyond its first year. The key is to follow the fundamentals of success:
1. Do thorough research first in the market which you are selling to.
Don’t reinvent the wheel. Copy other businesses which are making money. Don’t try to be unique. Unique is good — but expensive.
The key is to offer something different or address a problem that has not been adequately addressed before. Starbucks did not invent coffee; but they created their own spin in experiencing coffee drinking.
2. Create the product or get some stocked and then start selling.
Do not hire staff. Do not get an office. Do not get a new computer for your business. These come later.
Your most important step is to make sure your product or service sells. Try to sell as much as you can until you cannot manage it on your own. Until you need to hire staff before burning yourself out.
3. Be mean with all your expenses.
Try to get the best deal for everything.
If you can operate in your garage, do it. Don’t rent an office or buy new gadgets to run your business unless it’s absolutely necessary.
Remember you need all the cash you can. You don’t want to end your business in the first year, do you?
4. If your business can run on the internet, then starting working on it.
Put your money into developing an online business. It is far cheaper. You don’t need a bank loan for it.
5. Keep doing whatever is bringing in the money in your business.
Don’t expand and create more products and services, unless you are profiting comfortably and have a lot of money saved up.
If starting home business entrepreneurs follow the simple advice above, their business will have less chance of running into money problems. Even if the business does fail, they won’t have to suffer the after-effects of paying off their debt.
But that is not how the average entrepreneur think which is why so many have problems with debt later on.
Since money is the main thing that determines a business’ success, it is worth considering starting an online information products business first. The reason being that the profit margins are huge and the financial risk is very small. Many entrepreneurs are made just by running an online information products business. The start-up cost is small, the risk is low, profit margins are high and it is basically hands-free after it is launched. Read up on an information product business as another option for starting your entrepreneurship.
The article was originally published on June 16, 2014 and updated on June 3, 2020.
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- Top 10 Ways to Earn Money at Home
- What Works on the Web? 12 Lessons From Successful Home-based Online Entrepreneurs
- Pros and Cons of Financing a Business
- How to Make Money from Your Inventions
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