Small businesses are the backbone of the U.S. economy. They provide jobs for millions of Americans and offer entrepreneurs a chance to be their own boss and seek out their own fortunes. Follow these tips on how to reassess small business goals and milestones after your first year in business.
Unfortunately, despite the large number of small businesses that populate the American landscape, only half are able to keep their doors open through five years, according to data from the U.S. Bureau of Labor Statistics. Further, roughly two-thirds have to close up shop after 10 years. With the probability of survival decreasing with a firm’s age, it’s important to establish business goals early and meet them constantly. Without having a well-crafted path forward with clear, attainable milestones, you can find your business adrift or, worse, sinking, in no time at all.
Set short- and long-term goals
As an entrepreneur, you need to have one foot in the present and the other in the future. This involves setting both short- and long-term goals for your small business. Short-term goals involve building up your brand, increasing visibility in your local markets and, provided you are financially able to do so, hiring additional support staff. Reaching these milestones will help put your small business on the right track to growing your customer base and creating a solid foundation for future expansion.
Long-term goals are generally broader in scope, but no less important to work toward. These include targets like cultivating your current client base and ensuring long-term satisfaction. Others, such as increasing the physical commercial space or even expanding into new locations are major long-term goals that require time to reach. Ideally, your short-term goals should be a series of steps that work as a means to reach your long-term goals.
Create accurate budget forecasts
At this point, you should have a year’s worth of financial data on the books. This information is crucial for determining how to set a budgetary forecast for the new year. Financial growth is the key to running a successful business, and you cannot ignore what this data is telling you. While you may have only broken even in your first year of operations, the previous year’s financial data can show you where and when you found success, and where there might be lulls in customer activity.
Making a specific and realistic goal that you have the potential to reach is a great first step. Instead of simply aiming to make $1 million, instead create incremental goals, such as increasing the company’s revenue by 20 percent in the first quarter, 25 percent in the second quarter, 30 percent in the third quarter and so on. By establishing objectives that are not only reasonable but also incremental, you can adjust your approach if you don’t reach that first quarter goal.
Engage your customers and/or clients
According to Forbes contributor Eric Wagner, one of the biggest reasons small businesses fail is due to not engaging customers through deep dialogue. Too often, entrepreneurs retreat into the daily tasks of running the company, either by focusing on the product and services or burying themselves in the back-office responsibilities. While these are both extremely important parts of building a successful business, they can easily supersede the main drivers of growth: the customers and clients.
It’s vitally important for entrepreneurs to spend time engaging with customers to find out exactly what they want out of your business. While social media provides ways for connecting with these individuals, this isn’t enough to truly create a dialogue. Instead, owners should spend time on the floor and in the market learning about what their small business is doing correctly and what can be improved. Surveys, while informal, can also be a great way to gain crucial insight into the customer’s mindset as well.
Review all your financing options
The first year of running a business is tough. Unforeseen obstacles will arise out of nowhere and setbacks might feel like a daily occurrence. In many instances, you might find your profit margins barely recognizable, with little extra resources necessary to expand operations. Even though there might be a light at the end of the tunnel, without the funds to carry you there, it can be difficult to bridge the gap between now and then.
On the other hand, your new small business could have filled a unique market niche and you may find yourself with more customers than you can handle with your current resources. However, despite the thriving business, without the capital to meet demand, your company can end up treading water and not being able to take advantage of the burgeoning business.
Whether you need to find additional resources for keeping the doors open for another year, or if you need capital to invest expanding operations, alternative financing can be the solution you need. With no credit needed and approvals in a little as 24 hours, small business owners can find the funding they need with alternative financing to make the second year a successful one.