As a new small business owner it may be very gratifying to develop and sustain a business for an entire year- especially if you are doing so under adverse economic conditions. But keep in mind as you celebrate this one-year milestone that there will still be a significant amount of work to do to help ensure that your venture remains viable in the years to come. According to statistics, about half of all new small businesses will fail within the first few years of operation.
After the initial start-up stage, it is extremely important to shift your focus to financial planning, operational efficiency, and strengthening your market position- all of which can only fully occur once a business has been up and running for some time.
Below is a list of some important things to consider when your business turns one year old:
- Is the business registered under an appropriate corporate structure? Different corporate structures produce different fiscal, taxable, and legal realities for their owners, and it is quite common among small businesses that they change from one structure to another as they grow and develop.
- Are you taking steps to build your business’ credit profile? Building your business’s credit is essential if you want to have access to various forms of financing, but it is not a passive process. Make sure you are entering into transactions that will positively affect your business’s credit history.
- Evaluate your marketing strategies. After operating for a year, it is a good idea to examine your marketing initiatives to see how much Return on Investment (ROI) you are achieving. You should also consider if you are effectively conveying to customers that which makes your products or services unique.
- Evaluate your business’s operations. It is a good idea to take stock of how smoothly and effectively your business is operating so that any changes and improvements can be made. Think: quality control and productivity. Make sure that you also consider how your business is utilizing available resources, including worker input, supplies, and materials.
- Keep tabs on employee and customer satisfaction. If either of these two groups are unhappy then it does not bode well for your business.
- Cash flow, Cash flow, Cash flow! Is there enough available capital to cover operational expenses? What about growth? Make sure you are in touch with any impending cash shortfalls and that you have access to quick, short-term sources of financing.