It is not easy to start a business. The Bureau of Labor Statistics reports that 18,4% of new businesses fail in their first 365-day period. No matter which industry you are in, it’s going to be a highly competitive environment.
Your first year does not have to be a failure with careful planning and preparation. In order to get your new business started, it is important to create and follow a business strategy, avoid common pitfalls, take advantage of resources and learn from others. This guide will help you get off to a great start.
Do you need a business plan?
Technically, no. In five states, new businesses are required to have a business plan when they’re formed. It’s still a good idea for any company. It’s likely that you have heard the saying “failing planning is planning to fail,” which rings true especially for new business owners.
How to Write an Effective Business Plan Step by Step
Each business plan must include the following elements:
-
- Start with a “Executive summary,” that should include an overview of all the topics you plan to cover in your business plan. It also includes your company name and mission statement.
- Create a “Company description,” that includes detailed information about the industry you are in and your offerings. Include ways to stand out against the competition.
- Include “Market Analysis,” that describes industry trends, and provides more information about the target market and your competition.
- Outline the “Organization and management structure” of your business. This may include an organization chart that outlines each team’s responsibility. Here you will include the legal entity of your business, such as a LLC.
- Explain your “Services”, and how you will benefit from them. Here you will include your trademark and copyright information.
- Explain “Marketing & Sales Strategy,”, which is, at its core a plan on how you will attract and retain customers. You’ll need to include information about your sales process, your pricing strategy and how you plan to promote your product.
- Plan ahead and include “Financial Projects and Data,” as one of the key parts of your business plan. This is especially important if you want to attract investors. Include forecasts of income and expenses for the next five to ten years.
- Click “Supporting documents and appendix” to close the plan. These are documents that support your claims throughout the plan. This may include permits, contracts and sales data.
Common mistakes when writing a business plan
It’s not difficult to write a business plan, as long as you avoid the common mistakes that new business owners commit. They include:
-
- Starting a new business without a plan is a mistake. Your business plan is your guide and will force you to be specific about your goals and purpose.
- Failing to do a thorough analysis of strengths & weaknesses: You can easily underestimate weaknesses and overestimate strengths, and the way they will flare up in the market.
- Ignoring or underestimating your competition: Other companies can always take a piece of your pie, no matter how unique you business may be. Be careful not to exaggerate the competition threat, otherwise investors might start to worry.
- Making unrealistic predictions: It’s okay to be optimistic, and even bullish sometimes. But you need to remain realistic. It’s possible that you won’t sell 1 million products or earn five-star ratings in your first year. If you don’t include realistic goals and projections in your business plan, then you may be setting yourself up for failure.
- Too much information is not good for investors. A concise, clear plan containing the most important aspects of your business will be more appealing to them than hundreds of pages that are merely supplementary information.
- Making claims without supporting data or statistics. Cite your sources in the “Supporting documents and appendix” section to make your plan credible.
- Make grammar, spelling and punctuation mistakes: It is easy to make small typos, or forget a space, but this will make your plan appear less professional. These mistakes may turn away potential investors if you plan to seek investors in the future.
First 365 Days – Get Your Business Rolling
Your business will not grow if you don’t follow through with the actions items in your plan and continue to learn and grow. You should focus on the following during your first year in business:
-
- You can fine-tune your business plan by doing market research, and tweaking the product.
- Keep an eye on your finances. Check that you are tracking toward the goals of your business plan, and that all numbers add up.
- Listening and reviewing customer reviews, and making adjustments based on the needs and wants of your target market. Early on in the life of your business, it’s easier to make adjustments than later.
- Stay connected with a network of business owners and other professionals in the industry. Find a mentor. You can learn a lot from the collective experience of other people.
Choose the right structure for your business
Most businesses do not take the time necessary to create their legal entity immediately. This will save you a lot of hassle in the future. These are the most popular business entities:
| Limited Liability Corporations (LLC) | The LLC is a popular type of business entity, and it’s a great fit for many small businesses. They are cheaper and easier than C or S Corporations. |
| S Corporation | S Corporations are formed at the state level and offer protections like the separation of business and personal liability. These corporations are more complex and require more compliance and legalities than LLCs. They are best for large businesses. |
| C Corporation | C Corporations tend to be the most complex and expensive businesses. They offer more than small businesses require. They are required to issue stock, have directors and be subjected to “double taxes.” |
| Nonprofit | If you choose to file as a nonprofit, you will have the same rights as a corporation that is for profit. However, any profits made (that are not donated or used for public good) must be used to support the company’s existence and growth. |
| Sole Proprietorship vs General Partnership | You’ll be automatically classified as a sole proprietorship if you begin a business with a partner or by yourself and do not register it as a legal entity. It’s not recommended as this structure does not offer the same protections as other business structures. |
Get the Small Business Tools you Need
You do not need a costly tech stack or dozens of expensive tools in your first year. Many resources are free and can help your business thrive.
-
- Market Research Tool: Google trends, Question the Public and Pew Research Center
- Tax and Accounting Tool: Wave Accounting Software ZipBooks Accounting Software Incfile Business & Accounting Service
- Marketing Tools: FindThatLead (Buffer), Hootsuite (Mailchimp), Hootsuite (Mailchimp)
- SEO Tools: Google Ads Keyword Planner, Keyword Explorer, Link Explorer
- Website Tools: WordPress Figma Wix Invision Studio
- Asana ClickUp Evernote Google Drive
- HubSpot Customer Relationship Manager, Capsule customer relationship management
- Customer Feedback Software: Zonka, Qualaroo, TypeForm
Market Your Business Within the First 365 days
Your business plan’s “Marketing and Sales Strategy section” should contain information about how you will market your company. Consider these tactics:
-
- Website For new businesses, it’s important to have a website that is easy to use and searchable. Even if you only operate in brick-and mortar, this is still true.
- Google My Business A Google My Business profile that is accurate and current is important if you have an actual physical location. Included in this are your contact information, business hours, customer reviews, a website link, and other details. Create your profile.
- Local Search Engine Optimization: Local search engine optimization is essential to make your business appear on Google when people are searching for it near you. This is a high-intent user, which means they are likely to make a purchase. In one study, 88% of mobile users who performed a local search called or visited a shop within 24 hours.
- Social media: You should conduct market research to determine which social media platforms are most popular with your target audience. Regularly post high-quality, relevant content to help build trust and provide an insider’s view of your business.
- Email marketing: Your most loyal customers can be found among your subscribers, so start collecting their email addresses as soon as possible.
Visit the U.S. Chamber of Commerce for more information. Chamber of Commerce offers free marketing tools to small businesses.
First 365 Days: Tips from real business owners
Connecting with the community is one of the most rewarding aspects of starting a business. You can learn from others and connect with them along the way. Here are some real stories of entrepreneurs just like you.
Make sure you set small but attainable goals
It’s all about setting up time, writing down the schedule, and creating daily goals I commit to achieving. These are short, realistic goals, tiny habits I can concentrate on. “I’m just making sure I get everything done by the end.”
Be flexible and positive
Anyone who runs a company has to have the ability to handle failure well and to get back up again when knocked down.
Do not feel alone
“I started a business by myself a few years ago, but it failed to take off. If you team up with a partner who shares your same values, everything falls into place.
FAQs for Small Businesses
Do you want to learn more about how to achieve success in your first year? Here are some frequently asked questions:
A business that is well-planned will have a profitable future. Your first 365 business days will set the tone for your entire venture. An honest assessment of your products, the market, your competition and your target audience will pay off for many years.