Approximately 80 percent of all new businesses survive to see their second birthdays, according to the latest available data from the U.S. Bureau of Labor Statistics. But, the casualties start to mount over time due to the inherent challenges of keeping a business thriving. Fortunately, there are some steps business owners can take to better ensure their longevity. Following are some of the essential ones.
Devise a Business Plan
Business owners must create a business plan to understand better where they are today and where they’re going. Some important elements to include in the business plan are a company description, core competencies, a market analysis on the strengths and weaknesses of top competitors and a detailed description of the company’s management structure, according to the U.S. Small Business Administration. Other essential facets of an effective business plan are a detailed description of the products or services, primary sales and marketing strategies and financial projections.
A key reason most businesses fail is that they run out of money. Therefore, business owners should hire only those who are essential for operating the company, using even contractors to avoid medical costs. Other ways to save include working at home for as long as possible and purchasing supplies at discount stores.
The most successful entrepreneurs reinvest in their businesses to keep them thriving. This includes foregoing personal expenditures like new cars or boats and using the money to refine products or increase marketing. A gradual increase of advertising dollars is one way to ensure the success of a business — provided the ads reach the core customers.
The only way to maximize sales and profits is by giving the customers want they want. One of the best ways to keep apprised of customers’ needs and preferences is through market research, which can be conducted via in-store surveys, online or by phone. Loyalty programs also work well to build long-term loyalty.
Measure Progress Consistently
Savvy business owners use various metrics to gauge how their companies are progressing. Sales and profits are the most basic metrics new companies should track each month or quarter. Other ones include in-store or web traffic, customer retention, market share, operating productivity and cost of customer acquisition. Business owners should not only track their progress, but they must also strive for continuous improvement.