Five Factors that Will Make (Or Break!) Any Small Business

Everyone involved with business tosses around figures regarding the odds of success of any given business achieving success. However, these general figures are not very accurate because there are so many factors that can make a business successful or significantly reduce its chance of surviving. Here are the five factors that will make the greatest difference in your personal chances of success in business.

• Capital. Money isn’t everything, but not having enough will undermine your small business in the worst way. In order to make a small business work, you need to have start-up capital. This capital should include money invested in necessary equipment and inventory as well as capital for day-to-day expenses. However, this isn’t all that you will need. Depending on the type of business you have, you should also have a way of gaining more funding if it becomes necessary, such as through a home equity loan. Your cash flow should be constantly re-evaluated to maintain the right amount of liquidity.
• A Business Plan. In order to achieve success, you need to know exactly what success looks like. A business plan is your idea of how you expect your company to succeed and how it will be managed to increase your chances of success. This will give you a roadmap to follow when your next action seems unclear. As a bonus, having a good business plan increases your chances of procuring financing from a financial institution, taking care of the previous item.
• Management Experience. While it’s important to keep up with the latest literature regarding business experience, nothing can take the place of sheer experience. If you or one of your partners has never managed a business, you should consider hiring an experienced manager or at least having one consult on the case. Managing a business, especially one that isn’t yet established, is a delicate juggling act that can only be accomplished with years of practice. Don’t sell your business short by beginning with unqualified management, even if that management happens to be you.
• Industry Experience. How much first-hand, professional do you have in your field? This is another factor that can make or break your business. If you have not spent time learning the ins and outs of your industry, you will have a harder time managing suppliers, identifying new trends, and marketing to your audience. It’s easy to see how these factors might negatively affect your chances of success.
• Market Trends. How is the market in the product or service you plan to sell? While it’s good to find untapped niches, avoid markets that have a high failure rate or that have already seen their time. For instance, you have a low chance of being successful selling avocado-colored appliances in our decade. Thanks to the internet, it is easy to find the statistics you need to make these kinds of decisions. Having a market for your product is key to creating a successful small business, so do your research and know what you might be getting into.

More than any general statistic, these five factors will give you an idea of your chances of survival. However, don’t let these depress or discourage you. Even if the forecast doesn’t look bright, you at least know what factors you can change to increase your odds of leading your small business to success.