Startup entrepreneurs should not be frightened by the frequently conveyed statistic that half of all businesses fail within five years. Although the figure is true, it is an average of all industries. In addition, the number is a nationwide average. Business survival rates vary widely across different industries and geographical regions.
Here are a few characteristics cited by entrepreneurs that enhanced their ability to succeed.
1. Include lifestyle considerations in planning. Most entrepreneurs know to create a written business plan that describes the company’s function, market, potential, and capital requirements. However, a distinguishing characteristic of highly successful entrepreneurs is their consideration of more subtle details. These factors include thinking about the effort involved to succeed. An entrepreneur has to consider how many hours per week he can physically work. He needs to know who will operate the business during his temporary absence. He must be comfortable supervising employees. In fact, for some industries, an entrepreneur must get along well with teenagers because they might be the only affordable employees.
2. Cultivate a network of professional connections. Successful entrepreneurs take a little time before startup of the enterprise to develop important contacts that they will nurture during the company’s growth. This involves knowing where the company will locate its first customers, employees, and advisors. People tend to conduct business with those who they know. Therefore, it’s important for entrepreneurs to become known to key individuals.
3. Focus on a targeted market. Marketing a startup company is much easier when knowing who the buyers are. Every entrepreneur has limited time and resources. Success is most likely when focusing efforts on the right customers—and even turning down the ones that don’t match the business model.
4. Manage money efficiently. Planning for entrepreneurial success involves several aspects of money management. One is having sufficient personal cash reserves in order to use the company’s capital for growth. Depending upon the industry, an entrepreneur may have to survive for a couple of years without a salary. Personal reserves must provide for both basic necessities and unexpected emergencies. The other feature of managing money involves control over the company’s cash. Successful entrepreneurs base business decisions upon sound review of financial information. They know how to interpret financial statements. They understand what habits maximize income. In addition, they know how to limit expenses. For example, industry leaders don’t start out traveling with business-class airfare and four-star hotels.