Organic Excellence in the News > Survive Your Start-up Phase
Survive Your Start-up Phase
By: MATT ALDERTON
Most new businesses fail. Help yours succeed when you build it holistically with a positive attitude, and eye for detail and a penchant for planning.
Starting a business is hard work. More than that, though, it's scary work.
Just ask Cynthia Drasler, president of Organic Excellence Chemical Free Products, a Phoenix-based company that manufactures and sells chemical free personal care items. She started her business from her home seven years ago with nothing. Recently divorced, she borrowed a computer, bought all her inventory with credit cards and sold her wedding rings to purchase advertising.
"My biggest worry was not having the sales I needed to survive," Drasler says. She wasn't sure she would make it. After all, fewer than 50 percent of all small businesses make it past their fifth birthday, according to the U.S. Small Business Administration.
The reasons for failure are many—too much competition, insufficient funding, bad real estate, inferior products, inexperience, poor sales—but so, too, are the opportunities for success. Drasler found them—she now has four employees, an office and nationwide distribution for her products—and with an appetite for risk and hard work, so can you. Here are five strategies for surviving your start-up phase:
1. Set Goals
The key to start-up success, according to Drasler, is planning. When she started her business, she set daily and weekly goals to keep her chin up and her feet moving. She kept a journal of her goals and in it, noted when she reached them; at the end of each month, she looked back to see what she accomplished.
"This helps your mindset enormously," she says. "When you start from scratch, it's easy to get overwhelmed. Setting goals and later reflecting on what I accomplished kept me going because I was able to see that I was accomplishing more than I thought."
When the odds are against you, a positive attitude makes a huge difference. And nothing creates a positive attitude like a finished to-do list.
2. Concentrate on Cash
In her start-up stage, a lot of Drasler's goals were financial. "When you are a new start-up," she says, "you have to hold onto your cash."
Unfortunately, not many new businesses do, according to Craig Scharton, CEO of the Fresno, Calif.-based Central Valley Business Incubator (CVBI). As head of CVBI, it's his job to nurture new businesses into a state of maturity and health, and he says the biggest obstacle is often a lack of financial planning.
"The old cliché, 'It's a marathon, not a sprint,' comes to mind," Scharton says. "The time you put into the business on the front end will pay back dividends over the long term."
Out of the box, then, new businesses should spend time building a thorough business plan, complete with a realistic assessment of financial needs and a set of conservative financial projections.
Don't forget cash flow, either, says Paul Lemberg, author of Be Unreasonable: The Unconventional Way to Extraordinary Business Success and CEO of Axcelus Group, an entrepreneurial consultancy based in Del Mar, Calif. "Make sure you always have enough cash, credit and guaranteed receivables to keep the doors open for the next six months without any new client commitments," he says. "If you always have six months, you'll always be in business."
3. Market Like a Machine
Lemberg suggests that many start-ups buckle under the pressure of weak marketing efforts. "Most start-ups get a product or service right, and market it wrong," he says. "People who start businesses typically do it based on some expertise or skill they have, and use that to craft something that is cool technically. But they haven't thought about how that applies in the sense of how big the market is and what do people in the market really want and need."
In other words, new businesses need to think not only about their products, but also about the people who'll be using them. "It's easy to misjudge the timeline to gain new clients and customers," Lemberg says. "Therefore, market aggressively and constantly. Make new client acquisition your No. 1 priority."
Once you've got customers, figure out how and where to find more like them. "Sales make the world go round," Drasler says. "If you don't sell enough of your product or service, nothing else really matters."
4. Practice Restraint
In Drasler's opinion, too many new businesses spend too much money on too many things. Buy only what you need, she suggests, and nothing more. Exercise restraint. For instance, she says, "Don't worry about how your office looks. Just make it functional."
By that same token, Lemberg says, businesses should restrain their impulse to be perfect. "Many start-ups die because they want things to be just right before hitting the market," he says. "Instead, don't wait—and have great client service to address any problems."
5. Get Help
If you intend to weather your start-up phase, you're going to need help doing it, Scharton says. He recommends building a generous network of investors, employees, suppliers and customers to hold your hand through the rocky first years of your new venture. "It's helpful to have a support network that will help you get information more efficiently and will also be truthful," he says. "Don't surround yourself with yes-men."
If you're a sole proprietor, consider setting up an advisory board of peers that you can consult on important decisions. Successful businesses need good advice, and start-ups are no exception.
To survive, start-ups need energy, marketing, money and friends. Oh, and one more thing: They need fun, too, according to Scharton. "If you're not having fun," he says, "you're doing something wrong."
