The statistics are not encouraging. In fact, they’re enough to evoke fear in the new business owner. Most small businesses who start this year won’t be in business in 10 years. Most will fail and although it’s easy to blame the economy, the economy is only a small part. The issues may be much more simple than a sluggish economy. One consulting firm says that it is often a lack of preparation and research on the part of the new business owner. A great idea in the eyes of the business owner is only great if their customers see it the same way.
Before you open your doors, the amount of market testing, product research, and public outreach must be completed. Take, for example, Selena Cuffe. After visiting Africa and tasting wines from impoverished African cities, she had the idea of helping these cities and making some money herself by importing African wines to America. It would have been easier to get excited and order the wine but Cuffe didn’t do that.
Instead, she contacted some of the largest wine shops and restaurants in the largest U.S. cities and set up wine tastings. They agreed and although she didn’t make any money from the tastings, she gained something much more valuable. From these wine tastings, she was able to take the more than 100 African wines she was considering down to the top three favorites. This research cost her about $3,000 but in 2011, her company is expected to produce $1 million in revenue.
Next, gain trust by establishing yourself as an expert. Matt Powell didn’t grow his business overnight. Who would trust him with their retirement funds if he were to only take out an ad in the local newspaper or telephone book? Matt knew that before the business would grow, he had to establish himself as an expert in his community. He started by contacting the local library system and offering to do consultations free of charge. This grew in to Matt giving free seminars and other community outreach programs. He made sure that each person who came to him received stellar service which drove referrals. Today, Matt has $87 million under his management and he just hired another employee.
Finally, don’t forget to register your business. In the small business community, there is a misconception that everything having to do with state and federal government will be complicated and expensive. With the help of a business registration service, getting that “LLC” or other business designation at the end of your business name is simple and it adds an air of authority and trust to your brand.
Remember that a great business takes time to build. If you rush in to it, you will most likely join one of the many businesses who never get to celebrate their first decade in business.